One on One with Jonathan Tisch, Chairman & CEO of Loews Hotels
Monday, March 12, 2007
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SUSIE GHARIB: The slowing U.S. economy is having little impact on the hotel industry. So says Jonathan Tisch, chairman and CEO of the Loews hotel chain and author of a new book called "Chocolates on the Pillow Aren't Enough." Earlier today I sat down with Tisch at his flagship Regency hotel here in New York and asked him to characterize current business conditions.
JONATHAN TISCH, CEO, LOEWS HOTEL: Here in New York, business remains extremely strong. We had 44 million visitors last year. But on the consumer side, confidence weakening a little bit, gas prices going up. I have a feeling that this mortgage crisis might make people feel less wealthy than they actually are. They're worrying a little bit what their home is worth. That concerns me a little bit.
GHARIB: Jonathan, recently there's been a lot of talk about a recession or at least some kind of severe economic slowdown. Are you seeing any signs of that?
TISCH: We are not seeing it yet. As I said, occupancies are strong especially here in New York City, in other cities around the country and really around the world. So yet we are very responsive to choppiness in the marketplace. And things seem to have stabilized a little bit, but clearly we worry about outside factors that could have an impact on global tourism and especially national tourism.
GHARIB: Many people were shaken recently by this big market meltdown. How does a market event like that impact your business?
TISCH: Travel is usually the first or second thing to go when CEOs want to make their bottom line look a little bit better. They don't let their executives go to meetings. They send two instead of four. They don't let them go to conferences. That has not happened yet, but certainly if you combine some of these issues with the possibility of higher fuel prices, then that could have an impact on the industry.
GHARIB: When you look around the world, where are you seeing the strongest markets and the strongest market strength?
TISCH: You're starting to go see a lot of strength in Asia. People are traveling obviously overseas. They're going to China. U.S. brands are now starting to get big in the Chinese market, the Sheratons, the Marriotts of the world. Contrary to that, you're seeing Asian brands coming to the United States with Mandarin and Peninsula and Shangri-La. Europe is still pretty strong. So the major markets are holding up very, very well.
GHARIB: How competitive is the U.S. hotel industry?
TISCH: The United States has lost its edge in terms of being an international destination. The countries that we compete with are really going after that traveler to come visit them instead of us. When you add to that some challenges that we now see in the immigration process, getting visas and the entry of international visitors, it's making it a little bit of a problem for travel and tourism and for the U.S. economy in general.
GHARIB: Jonathan, you said recently that you wanted double the number of hotels in the Loew's chain. What's the strategy?
TISCH: We want to be in central business districts that we're not currently in, namely Boston, Chicago, San Francisco, Atlanta. We're strong in Florida with resorts. We'd like to do some more resort properties, Arizona and California. The challenge is that there's a lot of capital chasing deals right now in the hotel industry. The combination of off- shore money, REITs, private equity and very, very wealthy individuals who want to be in the hotel business make it a little bit difficult for us or anybody to try to find deals that make economic sense as well as fit into our portfolio.
GHARIB: Given everything you've said about the global economy, is this the right time to be doing a major expansion?
TISCH: It is the right time for us because our expansion is based domestically. We know that we are a very well known domestic company, 16 properties in the U.S., two in Canada. We have no plans to expand overseas at the current time. Anything that we do will be done in the United States, North America, Mexico, Canada.
GHARIB: In your book, you say that competition everywhere is intensifying. What are the competitive pressures facing Loews and how are you doing with it?
TISCH: When you really cut it down, we all have nice lobbies with marble. We all now have upgraded our bedding products. We have flat screen TVs in the room. What really makes a difference is the attitude and the service provided by my co-workers. In the old days -- and I'm a third generation hotelier, I've grown up in the business - I've been in this for 30 years, chocolates were enough in the old days. You come back from dinner and say, oh, they really care about me. You have to do that so much more in the lodging industry, in every business and that's what we talk about in the book.
GHARIB: Jonathan, thank you so much and good luck with your book.
TISCH: Thanks, Susie.
