How XpresSpa Converted Airport Spas Into Test Centers: CEO Satzman

One of the industries we've covered a lot, and understandably so, throughout the pandemic is the hospitality industry, anything connected with traveling and tourism. Um. The airlines of course have been just shut down or closed dramatically. Uh. Their business is really just dropped as a result of the pandemic, and understandably so well. Our next guest and his company certainly plays into this. We're talking about the Express SPA Group tickers x sp A. They trade publicly. Uh. It's about

a hundred and twelve million dollar market cap company. It is the world largest airport spat company. I've used them at an airport while traveling, and I'm sure you have two. Um, so let's get into what their business has been like and how they are dealing with the pandemic and what the future looks like. Doug Satsman is CEO of Express Spot, joining us on the phone in New York City. Doug, nice to have you here on Bloomberg. How are you, um great, good morning. Thanks care for having us on. Well,

it's great to have you here. Tell me a little bit about what your world has been like. Take me back to March and what it's been like since then. So in March we all know what happened across our community and communities around the world. UM our core business

has been airports. Spas were the largest global UH SPA operator in airports and we were deemed a non essential use appropriately so you know, by the end of March closed all of our spas down globally UH And then we had an idea from our chairman, Bruce Bernstein, could we offer COVID testing during this time and leverage the

real estate we have in the spas. So we started a down and dirty project with a small group of people and in seventy five days we went from idea to concept to pilot and got our first one open in June and JFK Terminal four. And since then, we've been continuing to roll out express check clinics, which offer COVID testing for airport employees, T s A, agents and UH anyone who works for the airport as well as travelers UM, and we have been expanding around the country.

We're focusing domestically first and then we can look broader, right, So like we're so what's your expectation moving forward? And and as you continue to I'm assuming branched out out. I know there was a headline, was it just yesterday or on Monday that you guys are going to start offering on site testing from select cities four NonStop flights.

I think this was for Hawaii specifically. But how do you continue to kind of embrace the environment we are and kind of help your company as well as the airline industry kind of get back to normal. So what we're finding is it's the private companies that are leading the way trying to figure out the the best path

for UM safe travel and returning consumer confidence. So it's the airlines, it's testing companies like US and some health app companies UM like the Common Paths, who we're partnering with to develop a process to partner with the airlines and destination cities or states UM and and to connect travelers through getting tested and then being able to convey their negative results and satisfy getting out of quarantine requirements or other requirements to be admitted into you know, a

country or a state. We started with Hawaii becoming one of their trust to testing partners, and then we've had several recent announcements with United and with jet Blue and with Hawaiian Airlines where we have partnerships now with the three airlines to partner with them on select cities. Often we're focusing on Hawaii right now, but we're looking to Transatlantic destinations and and other destinations around the world. Um so.

In fact, with jet Blue as an example, UM we are opening a second unit in Boston where we already have one express check, but we're opening a second one in their terminal UH to help facilitate Boston is being a hub for them to help open up more travel to more destinations and UH and there's other airlines we're speaking with as well. But these are the groups that

are fueling the way. And then we're partnering with the airports to get either leverage existing real estate that we have from our SPA business, but more often than not, we're being offered new spaces that are more more convenient

for travelers, like presecurity. I have to say the Investment Space has written that this has kind of created a resurgence and reincarnation for you guys as a company, and I do wonder, you know, how does this kind of factor into future longer term strategy at this point or is this just kind of a stop gap to get through. Uh? Well, it started as a stop gap to get through. You know, our our business was closed and this was a pivot that allowed us to serve the airport community, which where

we've worked. But what's happened as we've learned through the medical side, we are we are developing a new concept UM that takes what we've learned from health and wellness, our history, what we've learned from medical and are developing it to launch next year, which will you know, continue

with things like testing. It will run alongside Express check UM, it could run alongside Express spas, but in a post COVID world UM, things have definitely changed, and what travelers and employees are looking for are our new services that aren't offered at airports, and we're uniquely positioned to deliver that with our experience operating in the environment and what we've learned now working with doctors in our medical side right.

And my understanding is you guys doing testing for things like the regular flu and mono and offering flu vaccines to which is which is pretty fat fascinating How quickly just got about twenty seconds here? Twenty five seconds? How quickly? Though? Do you you're not abaniting of the SPA business or

are you? We haven't abandoned the SPA business, but we're watching traffic to continue up, and we've been successful in raising funds to help fuel future growth expansions um and to have a very solid balance sheet for investors to to stay in with us. We'll be fascinated to check in with you throughout one to uh see how it's all going, especially as you guys have pivoted dog. Doug Satsman, he is CEO of Express Spa on the phone in

New York. That's stock by the way down in and I'm just going to put that out there, so we've got the perfect guest to talk about that. Specifically when it comes to investing in wine. He's got an interesting platform out there. Orv Goldman is with us CEO at Acker and he joins us on the phone in New York, or nice to have you here. Uh, you know, tell us a little bit about UM, because I've covered what you guys are up to over the last couple of years.

Tell us about because you've got a new wine markets an analytics platform. Tell us a little bit about what you're doing. Okay, So what we wanted to do was we wanted to create a digital data and analytical platform to give people invested interested investing in wine, uh, a sophisticated tool to really analyze the wine market that does really, up to this point, has never existed. There have been

just some generic wine indexes. But we created the most comprehensive wine indexing an analytical tool UM in the market. And it's kind of like a Bloomberg for wine. It almost sounds like it is hoping. Even that I had a thirty five years in financial markets that was very friendly with Michael at the beginning of my career. Yes, we we we did do it. We created a Bloomberg for wine. So before we get into exactly the analytics to involved in it, because I am curious about that

and how it works. Tell me why wine is a good investment, So why it's very interesting. Wine is actually outside of the SMP. If you take all the asset classes, the second best performing asset class over time, and more importantly, it is about seven timeless volatile in terms of its annual returns than all the equity markets, So it is

a relatively uh, nonvolatile, high performing asset. The average return of wine over fifteen years is almos almost nine and a half percent, and um, it's uh, you know for people looking to diversify, Uh, it's been a really well performing asset class and if you can there's a lot of smart money that's involved. And what we've been doing is providing a platform for the average consumer to take advantage of it. Tell me how it works, because if I go to acro wines dot Com, I can certainly

shop and I can buy wine. But it's a lot more than that, is what you're saying. Correct, Yes, So

it's a basically there's two things. Um, you can take any one of our two hundreds uh proprietary wine industries to analyze either the broad market or we've broken it down to looking at regions looking advantages, looking at specific producers and actually looking at any specific wine and you can literally compare their its performance against any other wine index, any other financial asset, and you could really get into the minutia if you will, uh in a very discrete

way of analyzing uh a particular wine. So just like you can on a Bloomberg monel to do with equities, you can look at the broader markets, you can look at you know, sectors, and then you can look at specific stocks and you can compare them. And that's what you can now do with wine, which is interesting. So you know, when somebody invests in wine, do they actually you know, take possession of the bottles? Can they take possession of the bottles, do they own them? Can they

drink them? Or can they sell them? Or they can do kind of all of that. They can do all

of it. So a lot of so uh. You know, when you look at the market, there are uh, there is a large segment of the market where they from investment standpoint, people will buy wine and then have them professionally stored and over a period of time of five or ten years, and those people then ultimately sell them and pick up their capital gate right, and then there are those people that like to do that but also drink part of their seller and they can just access

at any time they want from these professional storage of facilities and you just call up and say I want to drink this wine this week, and you pull it and send it to me. And that's that's really how it works. It's a combination of all so the data. Obviously, the analytics are only as good as the data. It's based on where is the data coming from at this point and how reliable, I mean, what kind of back testing can you do? Because wine can be so fickle.

You can have a great brand, a great region, but you can have an off year and unfortunately, um or if I've only got about forty five seconds left, okay, so um, you can basically go through and look at that specific level of detail on the platform, right, so you're you're able to analyze that where you haven't been able to do that before. Interesting, But where are you

getting all the data from? Just quickly, so the data I'm sorry, the data, uh comes for all the data and we did this specifically and rushing is that we have twenty years of actors all data, okay, and we represent this year, we were thirty of the global market historically,

we're so we think it's very representative. We cleaned twenty years worth of data, got it, and we got it to we have uh, discrete parts of information about the data that has my apologies, we've got to run, but you've got to come back and do more because I find it fascinating. Irv Goldman he CEO at Acker check him out at acker wines dot com. So we've definitely covered the equity markets on this Wednesday, but let's get another check on what's going on when it comes to

fixed income. Perfect guests to do that. Stephen Kane is Group Managing Director portfolio manager at tc W. They've got roughly two five billion dollars in assets under management that as of the end of the second quarter. He joins us on the phone in l A. Stephen, good to have you here with us. So getting ready just a few more days here in the trading, actually just today and tomorrow to wrap up what a year it's been.

To say the least. When you look at the fixed income trade, do you anticipate that there will still be a very low rate environment and a lot of easy money slashing around? Uh? Well, first of all, thank you and good morning, thanks for having me on. And and um, yeah, I think the uh it is uh a good time to put in the rearview mirror. I uh was reading an article this morning actually that summed up pretty well that it's been a bowl market for risk assets and

a bear market for humans. So it's our story. It's I've been quoting that story left and right because it has stayed with me. I think it ran last week. Um, that is that is right in a headline. Yeah, so we can we can certainly hope that ends the bear

market for humans at a minimum. Um. But in terms of the financial markets and what we expect going forward, I think that um, certainly with rates, UM, I think the FAT is very committed to keeping the front end of the curve anchored and purchasing assets at a high rate. In so I think that certainly volatility and the treasury market is likely to be muted, though we do expect some upward drift at the long end of the curve

as inflation pressures begin to build throughout the year. In terms of the credit markets, UM, you know, we've pretty much round tripped in terms of spreads from where we were a year ago. So investment grade spreads are abound ninety basis points, high yield spreads around fifty basis points.

Is you know, if you if you went to sleep at the end of last year and woke up today, you'd think it was a very quiet year in as we know as anything but um is likely to be uh certainly less volatile, but we think they're still going to be quite a bit of turmoil and winners and losers um, you know, in the corporate sector, you know,

leading to disparate returns. So we do think there's gonna be a lot of opportunity for active managers, though the overall markets like likely to be a lot less of volatile. It's like you were reading into Bloomberg this morning, I'm like so impressed, what's interesting, And just to give props where it's due. Michael Reagan of Bloomberg Business Week gets the story he did. It's been a great year for stocks in a bear market for humans. It's just has

stayed with me since I've read it. And this whole idea of you know, investors just again and again ignoring the pain of the pandemic and betting on a future where companies rely less on labor. And that's something we just talked about with Sarah pons Act. Just this kind of human capital, it's just not as valuable, uh, and companies aren't valuing it as much. And you know the expectation that as a result, we might not have as much hiring and labors coming back to the workforce next year.

And I do wonder what that could potentially mean in terms of economic momentum. Steve come Well, I think what it means is that while you may see the overall economy grow at a reasonable pace, you know, it may grow low single digits in aggregate, you're going to see certain sectors of the economy doing much better than others. And I think you're going to see some areas of the economy that are under stress right now. Travel, leisure, retail continue to face pressure, you know, even though the

vaccines can to allow them to open up. So we think that's going to mean that credit work is going to be extremely important. It's going to be important to be in the right sectors of the fixed income market and the right credits as well. And we think another area of the fixed income markets and economy, they're going to be affected is commercial real estate? Um, what is

that going to happen? I mean, I walk up and down and I know New York City is maybe a city unlike you know, no other, but man, the amount of empty space, especially retail space, um, is pretty remarkable. And is it Amazon is just gonna eat it all up and do distribution centers everywhere? I think not? But how do you see it? Well? We think, I mean the trail addition away from retail has been going on for some period of time and accelerated the trend to

e commerce. And we're seeing, um, you know, the retail sector under quite a bit of stress and a lot of retailers, um, you know, going bankrupt, and we think that is going to lead to defaults and bankruptcies, you know in retail malls, particularly the B and C ones. I think the you know, the A class retail properties will find a way to repurpose their space and and uh stay uh, stay relevant if you will. But there is going to be quite a bit of stress in the in the retail area. And we also think in

in the office area. The world from home friend, we think is one that's here to stay. And um, you're already beginning to see vacancies uh increase in some urban business districts, and we think that is also going to

lead to some pressure and commercial real estates. I'm going to put out another story on Twitter that I think you might kind of interesting, and it talks about the big COVID changes in the world economy or only just beginning, and just kind of goes through some of them and the impact it will be by our and UH Curry and UH some of the other members of the Bloomberg team, which is I think again another must read. Steve Kane, thank you so much, Group Managing director of at TCW.

Joining us on the phone from Los Angeles, and we're just getting ready to wrap up here on Bloomberg Markets. Carol Masser in for Paul and Vonnie, but we have a great guest to wrap up our program on this Wednesday, and it has to do with something known as offsite dining. I hadn't heard about this, but apparently it is a

new thing. So let's talk about this because it's a growing thing and it's impacting certainly a market that we know has been really impacted by the pandemic specifically, So let's get into it with Michael montag montagon No excuse me, Michael montagon O. He is CEO of Kitchens United and he joins us on the phone in Los Angeles. Michael,

it's nice to have you here with us. UM tell us remind our audience a little bit of what you are doing, because we've definitely talked about it here at Bloomberg, but remind our audience what you guys are off to and when it comes to this whole growing world of off premise dining. Thank you, Carol, and it's great to be here. Thank you for having me on UM. Yeah.

Look are our business is focused on a tool to enable existing restaurant brands to capture what is a changing consumer preference towards off premise UM that entails for us UH providing a CAPEX lightway for restaurant brands to expand into new trade areas, which in our centers we have kitchen centers that generally have ten to fifteen restaurant brands that operate within them in their own four wall units.

And part of that value proposition that we offer is not only a way to stand up a restaurant in a new trade area and in a fraction of the capex investment in time, but also while they cook their own food to ensure there is consistency and the quality of the cuisine. We handle most everything else, from cleaning and sanitization to management at the front of the house. And then we have a consumer marketing channel that enables

consumers to order from more than one concept. So if you have different taste preferences within your household, whether that's you know, my son wanting pizza for the night, but my wife wanting sushi and and I wanting salad, you can order that under one ticket. And so we deliver a fair amount of volume to our restaurant partners that

occupy our premises as well. Um. So that's the general business model and how what we're doing through this time to help enable restaurants to navigate these very challenging times. You know, and I know you have been raising capital as well in terms of, uh, you know, supporting your expansion plans. Tell us about the growth that you have been seeing, and I am curious about, particularly in the pandemic, what kind of growth you've seen. Yeah, Look, we're very

fortunate that our facilities are full. Um, we have great restaurant nurs um that we operate hand in hand with and and they're doing quite well through this. Through this time period as well, we've been laser focused on our own unit economics and building a foundational business that can scale UM. At the same time, critical to that is making sure that our restaurant partners operate profitably within our

sites as well. We are very fortunate that Google Ventures g V is the largest shareholder in the company, alongside you know, great blue chip investors like Fidelity Investments and large real estate funds like ours, our Reality and Difico West UM. And you know, as we continue to grow and scale our business, uh, you know, we intend to continue to lean on the capital markets to help fund our expansion as we enter into our serious ce rays in the middle part of the next year. So you're

in Chicago, Pasadena, Scottsdale, Austin. If I'm looking at your website and reading it correctly, and to me it almost sounds like kind of a new hey, new version and innovative take on food courts. Yeah, exactly right. You know, our focus, you know, through our our existing facilities has been driving consumer preference UM to our restaurant brands UM in the way that consumers wanted and you know, this whole idea of off premise certainly has accelerated through COVID,

but there's really nothing new. We are consider ourselves to be a pioneer in the industry being founded. Uh and you know part of that when we got into this, we saw the trends, the trends Worth Calgary every year

for delivery for the years leading up to COVID. And you look at the trends elsewhere around the world, whether it's the Middle East or Asia, parts of Europe that have seen delivery penetration to the tune of plus, while we in the US have seen that, you know, not including drive around seven to and so there was there

we were lagging the rest of the world. And clearly with the trends that we saw from retail over the past decade, that consumer preference for convenience and nomini channel, with the market power and growing strength of millennials and gen z um that there would be new ways that consumers would and new areas where consumers would like to consume their food that proved to be accelerated through COVID. UM it was definitely jarring uh too many UM. I

think uh that as adoption curve stays the same. We're on a very steep slope of it, but you know, we have been a tool in that process where like you said on on what is more of a traditional food corp but one in a virtual nature that allows consumers to have choice and allows restaurant brands to drive the same volume through smaller flipmrints. Hey, listen, I do wonder Michael, and we've just got about a minute and

a half left here. I mean, will you say yes to anybody in terms of restaurants or do you think about kind of the mix that you are offering at a specific location. You know, it's an excellent question, Carol. We're very data focused as a company, is not surprising when you're largist shareholders Google Ventures UM we we we we you know, tailor or curate our facilities in a way that we're providing ultimate choice to our end consumer, but also work with brands that we know can be

successful in that particular trade area. And so yes, we are looking for a cohesive group of brands UM that are synergistic to each other and provide the end consumer, you know, ultimate choice and not to be cliche to our brand of Kitsch United mix, but you know a healthy mix of different options. That's really cool. Um, I don't see New York on it. It just quickly thirty seconds. Is New York something you guys would consider? Is that kind of just a tough market to come into very

very quickly if you could. We absolutely are coming to New York City. We're under construction at a site in man h Anhattan and it's you. We're excited to serve the people in New York City very very soon. All right, very cool? Um, Michael, come back because I'd love to hear more on what you guys are doing in and hear more as you continue to grow. Michael Montagan. Oh, he is CEO at Kitchen's United. Really interesting take in terms of what they are doing and bringing different restaurant

brands together under one roof. Joining us on the phone from Los Angeles. All right, that'll do it for this edition of Bloomberg Markets. Carol Masser in for Paul Sweeney and Bonnie Quinn. Thanks for listening to Bloomberg Markets podcast. You can subscribe and listen to interviews at Apple Podcasts or whatever a podcast platform you prefer. I'm Bonnie Quinn I'm on Twitter at Bonnie Quinn and Paul Sweeney. I'm

on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio