Miscellaneous Notes 5.19.16

LaSalle Hotel Properties (LHO) CEO Michael Barnello on Q1 2016 Results

Clearly we’re heading into a downturn

“Well, we’ve been through the cycles before, and there is no exact timing of when they turn up or turn down. The thing that we tried to outline in our prepared remarks is that we’ve seen the cycle’s lots of ways. Clearly, we’re heading into a downturn, and we’ve emerged from those downturns in the past with a stronger company. We have great assets with great asset managers and great operators, so it’s not a question of wondering if we’ll get through any kind of downturn. We know we will. And many times, it actually made us even stronger. But the priorities are to operate as best as we can in this environment despite the fact that we see the trends are slowing, but we’ve told the operators just to take more of a heads in beds mentality with how they’re booking the business. So, we’re looking out further.”

There wasn’t anything in 2008 to suggest that we would get 2008

“There is nothing to suggest that the downturn will look anything like what happened in 2009, but there wasn’t anything in 2008 to suggest that either. So, who the heck knows? It’s so hard to say, I mean, you have to pick your downturn because of the very big difference between 1991 and 2001 and 2009. Unfortunately, it hasn’t revealed itself as to what’s going to happen.”

LafargeHolcim’s (HCMLY) CEO Eric Olsen on Q1 2016 Results

The price environment is strengthening

“Let me start by making a few points about our performance. First, the price environment is strengthening. We have driven a clear directional shift in pricing in Q1 2016. Although prices remain much lower than at the same quarter last year, two-thirds of our country has raised prices from Q4 to Q1, driving an average price increase of 2.1% quarter-on-quarter, excluding India.”

Turnarounds are under way in China, Indonesia and India

“Third, China, Indonesia and India turnarounds are underway, and we are starting to reap the benefits of the decisive cost initiatives we have put in place. China and Indonesia results stabilized in the first quarter and in India, we saw visible results of cost-cutting, notably coming from our fuel strategy.”

Ron Wirahadiraksa

We’ve seen price increases in the brunt of our markets especially the US

No, no. It’s okay. Yeah. We did see price increases in the brunt of our countries with couple of specific callouts in the U.S., very strong market. We’ve seen price increases in Canada, both East and West. In Mexico, where we altered our strategy of last year which was more volume-driven, we still got – we see, and as I’ve said, good price increases, 13%, and the volume uptick of 8%

Staples’ (SPLS) CEO Ronald Sargent on Q1 2016 Results

FTC did not take the threat of Amazon into account in Staples Office Depot merger

“I think everybody on the call knows that last week the U.S. District Court, District of Columbia granted the FTCs request to block our acquisition of Office Depot. We were disappointed that the FTCs request was granted despite the fact that in our view it failed to define the relevant market correctly and fell short of proving its case. The FTC excluded ink and toner from the market definition of consumable office supplies. They only focused on Fortune 100 customers and acknowledged that there were no concerns about any harm to consumers or small or medium businesses. The FTC ignored the competitive threat from Amazon business and a host of other competitors and also encouraged witnesses to say things that weren’t true to bolster their case.”

Hotel Thoughts on AirBnB Notes

Source: Hotel Earnings Call Transcripts

Hotel executives are starting to mention in their commentary that they are nervous about competitor AirBNB affecting their business

Pebblebrook Hotels (PEB) CEO Jon Bortz said the industry is losing its pricing power

“So if you look at business around marathons as an example, where we used to have really intense compression and an ability to price that maybe what the customer would describe as sort of gouging rates. I’d say we’ve lost a lot of that ability at this point within the major markets where these events take place.”

Hyatt Hotels (H) CEO Mark Hoplamazian said the service offering between AirBNB and his hotels is substantial

“Airbnb is focusing their attention on how they could be effective on the business travel front. But there are just some inherent differences in what they can offer and what hotels offer. And I think those differences are really, really material and substantive in terms of stay experience for business travelers. So, do I think that there will be incremental penetration, over time, for business travel? Sure. But it’s not anywhere near the incidence of leisure travel and that purpose of stay.”

Lasalle Hotels (LHO) CEO Mark Barnello said AirBNB is directly affecting their performance

“Although it’s incredibly hard to quantify, there is no doubt in our mind that Airbnb and other similar services are hurting our top performance on the margin… Until the short-term rental sites and their hosts are held accountable to the law we think they’ll remain a threat to the hotels in major cities, which not coincidentally are the same markets in which we own hotels.”

Intercontinental Hotel Group (IHG) CEO Richard Solomos says he expects AirBNB to be more tightly regulated going forward

“As a source of competition, it’s small, in a market that is growing heavily. This is just a new dynamic and obviously because of the model, Airbnb is making an awful lot of noise, but it’s not a new competitor. And, of course, the whole unregulated nature of that market is attracting the attention more and more of regulators. You’ll have seen all the stuff around Uber. And I think it is important that consumers are protected and there is some real danger, particularly with the Airbnb model, of a lack of regulation and a consumer misunderstanding which I think we’re hearing governments talk more and more about.”