David Eisen of Hotels Magazine

He never panders to the industry he covers , and that is a rare gift as a writer and a rare gift as a reader . David is VP and editor-in-chief of Hotels Magazine , which covers the deals , disruption and day-to-day details of the global hospitality industry .

For that , he worked for Questex , a hotel data company , and then he was director of Hotel Intelligence Americas for the benchmarking firm HotStats . You've heard a lot about HotStats on our show previously and this is also a historic occasion . It's the first time we have two Miami University grads talking to each other on no Show . Jeff went there .

David is a proud graduate . David Eisen , welcome to no Show .

Let's just buy them out and absorb them and we'll all march forward .

Of the many examples you cite , you mentioned Marriott International , which , in 2023 , did a long-term strategic licensing agreement with MGM Resorts , and MGM represents more than 40,000 rooms in Vegas and other cities across the US , and this deal took effect this year , and it enables members of MGM Rewards and Marriott Bonvoy to link accounts and receive an assortment

of benefits . This is happening all over the industry , though . Why do you think partnerships are so in vogue and on the rise ?

That was years ago , it seems like years ago , but they were big in M&A and they brought all these diversified kind of brands on , but doing it through the M&A route . But then these partnerships is a way for companies to kind of add scale , kind of add scale and grow , but without that outlay of money . I mean it's .

I mean it costs a lot of money these acquisitions and we're seeing you know where the cost of debt is right now and everything else to finance something . Some of these M&A , it's very , very difficult . So why not do these partnerships where there's , like you know , really no money changing hands ? It's kind of a symbiotic relationship .

Because Marriott , you know as much as the biggest hotel company in the world . They didn't have a big presence on the strip right .

They had a couple hotels and collections , like with an autograph , the Cosmopolitan Hotel , but within one fell swoop that's adding 40,000 rooms to kind of the Marriott Bonvoy ecosystem where you know MGM loyal customers can take part in Marriott , bonvoy and vice versa .

So there's that symbiotic relationship and , as we all know , or at least I believe , of all the brands of any hotel company , the biggest , most important brand is the loyalty program and that's kind of like the middle spoke and everything else kind of dives off of that .

But we're seeing these partnerships where you know and we talked a little bit about Marriott these Bon Boy moments with Taylor Swift and Bryan Cranston and you know , drinking mezcal with the Breaking Bad guys . How cool would that be , right , even though I don't think they're . I've had their mezcal before .

It's not the best mezcal out there , although I'm a tequila guy . Shots fired , shots fired . I'm sure I'll hear something from Corzo Diageo who owns them . I don't even know who it will be . These partnerships , I think and we saw Hilton has done the same thing Interesting Hilton for years and years has always grown organically .

They're not known as a company that goes out and acquires other companies through M&A . They like to build their own brands out . However that may be , they've gone the partnership route and I know the question is about partnership . They've also got the M&A route too .

I mean they've acquired the Graduate Hotel brand , which is a collection of about 35 hotels across , mostly in the US . There's a couple , though , in England as well to really tap into that college market , and I've been to one of these . So I've been to a couple of them . They're really cool . A couple of them they're really cool .

I mean , they're very like hip and you kind of feel like you're back at your back at school . So they , you know they acquired that brand . They've acquired the nomad hotel brand , one hotel basically in london . There's another in vegas that wasn't part of the deal , to kind of and that's going to be their luxury lifestyle play .

But then they've also gone a partnership route and they've done , they did a partnership with I wish I'm sure that are your audience is aware of withamp , which is this kind of you know hip , outdoor experiential company where you know you can and we did actually a brand experience down in Nashville where you can , like you know , rent or stay in one of those

airstreams . So it's very like , kind of outdoorsy , but it's again it's just another way that Hilton Honors members can take advantage of another company and then of course , obviously get rewarded for it .

We're seeing partnerships and alliances that are kind of creeping down , not just in these , you know , the big consumer brands , but at the third party management companies which you know , there are literally hundreds and hundreds of these third party management companies , all the way from Ambridge , which is like thousands of hotels , all the way down to kind of other

companies that I can't even name because there's so many of them that have maybe five hotels that they manage , right , you ?

Protea brand in Africa , ac out of Spain , the Gaylord acquisition only four hotels at the time , but monster acquisition . Delta made them the largest supplier of hotels in Canada . It was a series of acquisitions that led up to the Starwood one . What I see during that time , by the way , hilton was fairly idle , actually totally idle .

They would create a couple of brands organically , but they really wouldn't go out with a balance sheet and use it to go acquire . It was all organic growth . To me , the big shift there and you touched this was the role of the loyalty program . From 2012 , call it till today .

The loyalty program has gone from something that brands tap into to the center of a hub .

And spoke An interview recently with IAG's loyalty IAG , the parent company British Airways , with their loyalty CEO , adam Daniels , and he mentioned something that his words were really emphasized that the new partnerships they're doing with Qatar Airway , finair , but also outside of airlines , with Uber , barclays and banks , is that they're recognizing the power of the Avios

as a currency and they're calling it a currency . It's such a departure from the way loyalty programs have always been presented . To me that's the core . I love . Your take on it . That's the core of these partnerships is get on board with my currency .

The loyalty programs are so like I , for instance , I have one of my best friends . He works for a big bank and I won't even name the brand , but he stays at a hotel . He gives them like a hundred nights a year , whatever it is .

He's there all the time and they still don't when he goes to the front desk , they still don't even , like you know , know his preferences or call him by his name . Like you know what I mean , it's all still very transactional . The hotel companies they do a great job of marketing their loyalty programs .

You might know better than me the actual effectiveness of them when it really comes down to it , that like the hotels that don't really offer you anything for your loyalty .

I do feel like a lot of the stuff like the Taylor Swift tickets and the Breaking Bad crew doing Mezcal . It feels very press release-y to me , like the rank and file .

I don't think care , I have no data to back this up , but I think , like Jeff , when you and I talk about loyalty programs , it's like I want free nights in Tahoe and I want to skip lines and that's what it comes down to .

Or they're just the person who had who signed up because they got there was some kind of promo at the beginning or because they get the free watch . You know what I mean ? Like I don't know how many are that active using it , and that's really

what's important . It's like like , for instance , for me , when I write a story and I go on Google Analytics . There are lots of stats there . My biggest stat that I think is most important to me when someone's reading a story is the stickiness , the engagement . Like how long have they looked at the story ? Right , and they've actually .

I could tell they read it through , so they spent like five minutes on it . Or the person who goes into a story , clicks on it and is there for eight seconds is gone . Who's more valuable to me ? Right ? Not the sheer volume , but just the more discerning , the stickier person .

By the way , it's very difficult right now when we're seeing , you know , all these companies look for six to seven percent , you know , annual growth and net unit growth . But it's very it's not that's it's not where it is right now and a lot of these companies are looking to conversions and to kind of grow . I call it the conversion wars .

Remember they had the bed wars , tv wars , all those wars . It's kind of the conversion wars like hotels , transactors , a dirt of transactions as you know , but like how do you get your flag on this building ? Cause that's the way that you can kind of to push that just Wall Street . You're actually growing at a clip that's acceptable .

Interest rates haven't moved and I hear that the catalyst is buyers and sellers coming closer together and accepting that a 7% to 8% cap rate is now 9% or 10% . Few things to me are fuzzier math than a cap rate . The number is not big enough . Let's multiply it by 8 . Still not big enough ? Okay , multiply it by 10 . Still not big enough ?

Okay , Multiply it by 10 . Makes very little sense to me . But who cares about my opinion ? What's yours ? Why are buyers and sellers coming closer together and how have cap rates all of a sudden changed so that deals can get done ?

We always talk about the buyer and seller gap and that delta between the two and what I've heard it is coming down , it's narrowing and I think at the beginning when sellers are like , oh , my hotel is worth this and you can't tell me how it's not worth that , and blah , blah , blah , and a buyer's coming in obviously at a lower ask .

So the bid-ask spreads are narrowing , I think a bit . And when you look at where interest rates are , we heard from the Fed yesterday that there probably won't be a rate cut anytime soon , maybe one at the end of the year . I think it's a normalization that people understand that not that I myself was a big buyer of real estate .

We're never going to get back to that zero and that was crazy . Probably there's a normalization of that and there's an understanding that money should never be free , that if you're going to borrow money there's a cost to that . So I think we're getting more to that normalization . And if you remember I mean I'm not that old but years ago it was 19% rates .

It was ridiculous 10 double-digit interest rates and no one batted an eye . It's just people got comfortable with the fact that it was basically free money and obviously brokers love it when this stuff is starting to kind of thaw out , because the JLLs of the world Believe me , I get hit with my inbox every day about transaction .

I'm seeing more of them now , which is a good thing , I guess . Right , jll CBRE ? I don't know , it's interesting . Transactions for me are interesting . I don't mean to go off on a tangent here , but it's like tell me why a heady transactions market is good . Why is it good when hotels are traded every ?

I mean , is it because once they change hands they'll probably be a PIP or a renovation or just needs new blood ? I guess that's what , and it gives it's the opportunity to recap . I don't know . It always seems to me , though sometimes when you see some of these , it's not private equity but a lot of the REITs . They're long-term holders .

So I'm always wondering why is it ? Why is a good transactions market or not doing a good , but why a one that is a headier ? Why is that better for the industry ? You might be a better you would . You would tell me you would have a better answer than I would .

Also , when I was with the Hampton brand , I was surprised when I saw a year where we had 300 new hotels coming into the system and our nug was 100 . Nobody really talks about the 200 that left the system .

Maybe if we lose 100 , we better add 200 .

It goes to your point , though , with the Hampton brand , which was like a category killer and still it's a great brand from a developer standpoint , but it got almost too high up from an ADR perspective and maintaining it . So you're right , they had to build something below it . I think they started with , well , there was True , the TRU True Hotel .

That was like the first one , but that's a new build one . Then they figured out well , we need to do something where we can convert hotels to under the Hilton brand , and that's the thing . And that was Spark , right , and I visited the one in Germantown a couple of months ago that was BF . Saul is the owner of that one .

But it's like it's funny because all these hotel companies , from Hyatt to Hilton to Marriott , that always kind of played in the upper tiers , right , they were like you know , they didn't really get in at mid-scale , they were all . All their stuff was kind of in that upscale luxury , that kind of thing , and they're all going .

You know , downscale , now right , and then you have these brands like Wyndham and Choice are trying to go upscale . So they're like going against each other . Nowadays , it's not about sticking to what you've always been , it's about these companies aren't really hotel companies anymore .

You know well , they're franchisors , right , but they're travel companies , and that goes back to the loyalty program . It's all about being offering your audience everything under the sun that they want . So it's like with Hilton , with AutoCamp oh , we have this outdoor thing . We don't have that in our set .

We don't have these kind of like where you can stay in a teepee or an Airstream , and now we do . We have that offering right with AutoCamp . It's just about filling in all these gaps from a travel standpoint .

I mean , if you look at even look at Marriott with their homes and villas , that's something they added because they didn't have it before and they're trying to compete with Vrbo and Airbnb on that account , trying to compete with Vrbo and Airbnb on that account .

Howard Johnson to me that's a brand , but Howard Johnson's is different because Howard Johnson's used to be like these cool restaurants , so there's a difference .

But a lot of these new brands that have like maybe you know they're not at scale , these are offerings , these are just something , options under that larger kind of brand umbrella , whether it's Howard Johnson had an exterior and interior design that I think , even though we've never stayed in them , we can kind of conjure a Mad Men era view of what those places

looked like .

I think kind of get it right and , and to your point , they're very homogeneous , all these designs , it's . It's just , it's just a different name on the window . But to to Jeff's point earlier brands are interesting because do these hotel companies , do they build brands for the consumer or for the developer ?

To your point about NUG , you can only build so many Hamptons . Now you've got to build a true hotel and do something else .

But with that said , you wrote an article that I thought was pretty cool the Airbnb being meaner marketers than hotels . Tell us about that . I thought that was pretty well . I like the impact there .

these . First of all , airbnb does a fantastic job from a visual standpoint . I mean , they're really the newest commercials , are very kind of like um creative , and they have this cartoonish quality to them , but every one of them is like , basically like shows , what's wrong with staying at a hotel versus what's right with staying at airbnb .

So it's like you're a family of three and the whole thing is about like you go to a hotel and you have to go to bed when your kid goes to bed because it's one room , right , but at Airbnb you can put them upstairs and go to sleep , and go downstairs and enjoy champagne while watching the fireworks above the Eiffel Tower , which was one of them .

And then it was another one where it was like five friends going on a trip and they all go to a hotel and they all go to the hotel and they're all opening five separate doors and going to the room , as opposed to if they go to Airbnb , they can all be together and there's a big fiesta and party and there's music and all that good stuff .

So they basically you know it's a shot at , a shot across the bow at the hotel , at the hotels , but on the other side of that , the hotel industry is very still in that kind of mode of like .

Let's just present what we're good at and you know not even the industry just what we're like Marriott's or they're very aspirational but it's very much like well , every , every single hotel ad you see is all harks back , gets back to their , their loyalty program . At some point you have to publicize that .

But you know the Bonvoy commercial that all these different brands we have and there's and you know best question has a beautiful I love their ad campaign , which is very much . They use the uh , the weight , the song by the band , so it's very like tear jerky . But it's all about like a family , multi-generational .

They're on the beach and they go back to the hotel , whatever it is .

But it's still very much like just about the hotel itself and the only one that did I've seen that hilton actually did a did one where it was a shot against Airbnb or home sharing , where it was like you know , you look online for an Airbnb and it's like it's supposed to be this beautiful , like Victorian , I don't know house or cottage , and then they get

there and it's like a haunted house with haunted dolls and all that stuff . Why doesn't Marriott do more of that ? Someone said to me well , it makes sense because we just talked about it . They have their own Airbnb-ish product now .

So if they did that , they'd basically be damning themselves with their Homes and Villas product now , because they'd be doing the same thing . It would basically be like saying don't stay at Homes and Villas because it's creepy like an Airbnb .

They make no claims to be . They are a tech company .

We're like the automotive companies competing against horses and stables . You just don't know how to accept us as what we are .

It's like when you go and stay at a hilton , whatever it is , the guests might be like it's hilton . They probably think it's owned by hello . No , it's .

It's run by a group of people that are hired by this third-party management and all they all get their paychecks from , not from hilton , they get them from from the third party , and they're the ones who are actually offering . Now that these the brands , you training and all that , and they wear the it's . You know the the garb , but it's like they're actually .

It's these management companies who are really providing the hospitality marriott will still manage .

They have operational cultures , hospitality cultures , there's no question , the core of the company , they are brand management companies now .

David , your rich aunt very rich aunt unfortunately just passed away . She had a very long life , though , and she loved you , and she also knew that you were a huge sports fan .

So she has bequeathed you a nice chunky $10 billion , and her express wish is that you would use this money to purchase a sports team , but she's giving you the choice of any sports team , any league anywhere in the world . What team would you purchase ?

. He's a sick masochist , no man . Where do you guys bid ? Well , here's the thing Baltimore Orioles , yes , in a heartbeat . The problem is that Peter Angelos , who passed away , and the Angelos family sold to David Rubenstein this year , who is the CEO of Carlisle Group . So there's a hotel tie in there , because they own hotels too .

So I'd have to go in and buy it back from . Buy it from him and I don't . It would be hard to pry from him because I don't , I don't . At his age I don't think it's so much like something from an investment as a kind of something that's really deep down and passionate about .

But if I had $10 billion tomorrow , I'm buying the Baltimore Orioles and on day one I'm inserting myself at shortstop , and even though we have Gunnar Henderson as probably the best one or two shortstops in entire baseball , he either has to go to bench or I'd shift him over to second base because I'm playing shortstop If I can still throw the ball all the way

across the diamond . But I'm buying the Baltimore Orioles without hesitation .