Why Every Major Hotel Brand Is Giving Money Back to Owners

0:00Seth Borko: ZS is a global consulting and technology firm that partners with companies to improve life and how we live it. Working with the world's top hospitality brands, ZS brings together data, science, technology, and human ingenuity to transform ideas into customer loyalty. They're ready to help you elevate guest experiences, improve operations, and uncover preferences and motivations through their AI-powered solutions. With more than 1 ,700 clients in over 170 countries, ZS has built the expertise, fortitude, and vision to help you deliver impact right where it matters.

1:00Seth Borko: The number of the week is$125 million. That is how much more Marriott's credit card fee revenue is expected to grow annually by 2028 under the new JPMorgan Chase and American Express agreements. And this week, Marriott also announced it is paying forward some of those growing top-line and bottom-line gains to hotel owners. We've talked a lot about that here on this podcast that make up its network. Now, they were not the only ones to do that. Hilton did the same thing this week, and so did Hyatt. So, I don't know, Seth. Are we in this, like, franchise relief moment? Is this what's going on? Yes.

1:44Sarah Kopit: Simple answer. Yes. And I think you should get some credit for it, Sarah. One of the things I've learned, we talk about your Midwestern roots, so I will brag for you. I think you totally put your finger on the pulse of this topic. You've written three pieces about it now, about the tension between hotel owners and the increasingly just simply marketing companies, franchise companies that market their properties for them.

2:15Seth Borko: Those are tough words, calling the big brands marketing companies.

2:21Sarah Kopit: why why is that tough that's the best some of the best marketing companies known to mankind

2:26Seth Borko: ever created it's a compliment yeah there you go i guess right i don't know i think it's a

2:31Sarah Kopit: compliment and i think it's also just a fact when you look at at the asset light trends i mean it's not an insult to call them marketing companies in fact being able to develop a product and market it to a global audience with a global network and make more money than you ever have in the history of the institution,

2:48Seth Borko: I suppose that's not too shabby either.

2:51Sarah Kopit: It's praiseworthy. And I was going to say, what I was going to say, actually, and soften my tone a little bit, is that one of the things that, we can talk about this, Sarah. I mean, this is obviously our first topic of the day, and we'll jump into it. But one of the things that I think came through in some of our conversations is that although, you know, just for the sake of a good headline and a good news story and a good whatever thumbnail, this often gets marketed and framed as an X versus Y debate, but both the hotel owners and the hotel brands have been very clear on record that this whole thing doesn't work if their incentives aren't aligned.

3:27Yes.

3:28Sarah Kopit: And so one of the trends we're seeing is I think the brands recognize this. I think the owners recognize this and they are course correct and say if too much of a gap is open between us and we're making a ton of money, how can we close that gap and get our incentives aligned in a way that makes a lot of sense? That seems to be the trend.

3:47Seth Borko: Was there anything that struck you about how they're doing it? So each of the big three that did make some, I suppose, concessions, I guess, would be the right word. Or concessions, sure. They're all doing it in slightly different ways. Did anything strike you about the manner in which they're going about giving some of this relief to the owners?

4:09Sarah Kopit: Yes. And I think I have a few thoughts. But why don't we start? Why don't you, for our listeners, just recap the Marriott news that came out today? Because this is all pegged to Marriott's earnings. They reported second quarter earnings. And what was in our report in Sarah? And then I'll give some reflections there.

4:25Seth Borko: Yeah. So Marriott is launching this incentive program that rebates up to 50 basis points of gross revenue to franchisees who hit strong guest satisfaction scores. So basically, that's a kind of complicated and jargony way to say if guests like your product, we're going to give you a bit of a rebate, give you some money back in what you pay us in fees. And so that was essentially the Marriott news. That's the way that they're doing it. And Hilton and Hyatt are doing it slightly, slightly different.

5:02Sarah Kopit: Well, what I think is interesting is that I guess Hilton structured it somewhat similar, right? They have this program, they're calling it Rise, and it's going to discount franchise fees and other fees. Actually, I think it's not franchise fees, but it's just fees.

5:15Seth Borko: It's not franchise fees. That's the thing. And I think that that's and I think that's the I suppose my my gut reaction to it was that none of them are actually cutting the franchise fees. It's like this smaller and it does make sense to me. It makes sense how they're doing it. They're giving like smaller, like little nibbles at the they didn't go in and do like the big thing. The big thing that owners want is take that like 5%, 6 % off the top line and say, we're going to make it four. They did not do that. Instead, they're kind of doing this. It's almost like they're kind of seeing or this was my take.

5:54Seth Borko: They're testing the waters like maybe now like this is a little bit. And then if they have to give a little bit more and they have to give a little bit more. So like people like me and you and the owners will stop like when are they going to stop like moaning about it? Right.

6:09Sarah Kopit: so that was my take what was it that a philosopher once said um you can't always get what you want

6:15Seth Borko: but sometimes you get what you need in in the immortal words of mcjagger i i think he wrote

6:22Sarah Kopit: that yeah he i i'm almost certain he did i if i that would be huge news if it turns out that the roland stones were paraphrasing someone else in that song but um it could have been keith richards could have been keith richards you're right if we're being if we're being fair you know

6:37Seth Borko: could have been Charlie

6:40Sarah Kopit: there are a lot of great singers

6:42Seth Borko: we have to give the other stones some do

6:45Sarah Kopit: this is not a music podcast you're right we don't need all credit to go to Mick Jagger but I think you've done a great job of this and that's exactly what I was going to say there's two things that stand out to me about it the first is that both of these franchise fee rebates are linked to performance so in that sense they're not really rebates so much as they are bonuses just like bonuses paid out in a really weird structure i i think that's cool and i think you know what i was saying again about we need to align incentives i think that makes a lot of sense to me and i think also this is a bigger point and i might go down a rabbit hole so pull me out sarah if i go too far but okay these these marketing companies marion hilton hyatt and many others are increasingly less about a single brand and in fact their brands are increasingly you know

7:37Seth Borko: when you have a 30 yeah no i mean we we write about it all the time it's like it's like every week we're like you know hilton is is adding yet another brand i think we're up to we are up to

7:49Sarah Kopit: almost 30 i believe oh yeah you know the bigger ones are above 30 for sure and then when you add in the fact that of those 30 brands some of them are soft brands turns out the soft brands that It turns out soft brands are some of the fastest growing brands in these portfolios. And those soft brands are really, you know, a sub portfolio of hundreds of different brands. I think increasingly, you know, what in the old days you would say, and I'm going to just pick on Marriott because they're the ones who reported earnings most recently. It's nothing personal. But Marriott stands for Marriott. We have brand standards and a part of what we deliver in addition to market and distribution is brand standards.

8:23Sarah Kopit: increasingly though what a marriott brand stands for it's been i don't want to use the word diluted because it's not like it's gotten worse but marriott now stands for autograph collection and marriott and courtyard and saint regis and and and it stands for so many things that increasingly i actually think it does make sense to say you know what you're not really paying us a franchise fee to be a marriott how about this just do a great job running your hotel and if you do a great job running your hotel, whether it's select service, full service, luxury, whatever, we will give you a bonus in the form of a rebate.

9:02Sarah Kopit: And I actually think that that kind of feels like the direction we've been heading in a while where it's like it's less about the individual sub brand and more about how well you are running your portfolio. And how does a huge network like Marriott or Hilton or Hyatt or any of them, I'm not picket or marriott how does any of these brands incentivize that properly with this huge increasingly global base of owners operators management companies and uh to say that you don't get a discount but if you do really well and guests really love your property you get a rebate i mean that feels like a logical conclusion of a lot of the soft brand stuff that we saw over the last

9:38Seth Borko: decade anyways yeah i would agree i'd agree i'm i'm very curious to reach out i want to reach out to some of the owners that I talked with over the past several months to see how they feel about this. Stay tuned. I'll write that one too.

9:53Sarah Kopit: I think one other thing they're doing, which is quite interesting, is they're offering these, I guess I'm calling them bonuses, not only linked to incentives, but they're being offered in the form of rebates, which to me is very much the lesson learned from hotel pricing itself, which is that you never cut rates don't ever cut rate because once you cut rate you never get it back so you can feel free to offer a discount because you can modify that discount program in the future you can change the discounts but never cut your core rate and i think that was literally a lesson that they learned externally client-based and airlines have learned that lesson right um hotels are wearing that lesson airlines have done exactly the opposite in this

10:41Seth Borko: oil crisis. They raise the rates and then the oil come back down. It's like, oh, we're just going to keep them there.

10:46Sarah Kopit: Yeah. Well, you know, and they've created complexity, right? Like the base economy, like whatever, we'll build in a basic business, which is just a contradiction, but we saw that happen. So we will complicate our programs. We'll create more fair classes. We'll create loyalty discounts. We'll let your points count for 2x extra if you have this credit card with us. There's all sorts of ways that they are offering discounts and offering values that are designed to incentivize participation, but that never cut the core fare. And this is the B2B version of that, which is that we are happy to create complexity.

11:21Sarah Kopit: We're happy to create programs. We're happy to create positive incentive. We're happy to offer bonuses or discounts. But we're not, the very last thing we want to do is cut the core fee. And it worked on consumers. Why wouldn't it work on owners?

11:36Seth Borko: Exactly. I had to buy a new washing machine today. for my short-term rental upstate because it broke. And the price was set at, you know, whatever it was, some large number I would not like to pay. But then it was cut by various sales and discounts and also a rebate. So, like, it's the same kind of thing. Same kind of thing. Lessons from consumer sales.

12:03Sarah Kopit: One of the great challenges of measuring inflation, but we will not get into the joys of BLS economics and how we measure packages of goods. But I will say one more thing, and I'm kind of off topic, and now I'm definitely down to rabbit hole, and you should definitely pull me out. But this is not Keith Richards or Mick Jagger who said that, but there is an economist somewhere, and I can't quote them, but that there's basically only two types of innovation in product. There is bundling, and there is unbundling. And that's kind of, I think, what we're, it's true of the B2B product as well. You know, in theory, a franchise agreement bundles a whole bunch of services.

12:35Sarah Kopit: It bundles management expertise, technical plow, services, marketing services, distribution services, and financing services.

12:43Seth Borko: Oh, yeah.

12:44Sarah Kopit: You know, financing services all being bundled into this one thing we call a franchise agreement. And the only way to innovate is to unbundle parts of it or re-bundle parts of it or add discounts or rebates to it. So it's still a franchise agreement is still very much a product. And there are very much competing products out there that unbundle it, like technology providers, like Muse would love to unbundle some of this stuff. and bookend would love to unbundle some of the stuff and amex would love to unbundle some of this stuff and um well and they're doing it i mean like they are like it it is it is currently

13:17Seth Borko: happening um which is which is kind of i i think another reason that are as you call them now marketing companies are doing this is because you know as we talk about capitalism capitalism is playing a part in this right now. You know, there used to not be alternatives. Well, capitalism plus technology. And now there are. And so, you know, if you're sitting...

13:44Sarah Kopit: Markets working as intended. The bundled product of hotel management, hotel technology, and hotel loyalty. There is now hotel loyalty in the form of credit card companies. There's now hotel technology from independent focused PMS providers. And there is now, what was the third one I even said? marketing, distribution, and I've already forgotten the three things. This is how my brain works sometimes. But you get the point. There is now competition for these sort of things. There is competition. And that competition is putting pressure on the product, which is franchise. And they are innovating and responding.

14:21Seth Borko: In kind, as the market requires them to do.

14:27Sarah Kopit: So the gears turn slowly in B2B, but they they turn nonetheless i think that's actually a funny angle we could take on this is that oh and i mean i mean and of course soft brands and portfolios like the preferred hotels of the world have unbundled some of this other stuff oh and and management companies they're independent management companies so like all the pieces of it the sticky the sticky wicket as the brits would say remains and i think you highlighted this wonderfully sarah the sticky part remains the financing yeah that's the hardest part on bundle money money money money another song this is slowly becoming a music podcast we are we've had to say i just i think i just sang on

15:08Seth Borko: yeah publicly that's what else in the news what else in the news this week sarah i think this is

15:14Sarah Kopit: a very newsy quarterly earnings week anything else going on that that caught your eye under your editorial team that you were excited about so this wasn't necessarily out of earnings but

15:25Seth Borko: But, you know, we're in the depths of summer right now. You know, August is the, I don't know, the hot, steamy doldrums of summer. And our new climate reporter, Tasman, she had a couple of great stories this week that also about hotels. And one was about air conditioning in Europe. And the other one was about sargasm, which we've talked about on this pod before. And just it's so her story is just both of them really kind of look at the fact that hotels have operated for one this one way for this a very long time. And now because of climate change and because of heat waves and heat waves that cause seaweed like they like we are at an inflection point like they no longer can ignore it.

16:19Seth Borko: the time is now right and so if you talk to a european or a british person i don't know it used to be that they would say oh just suck it up with the ac like i even this year some of our colleagues i was like so if you could go buy an air like could you go buy one if you wanted if you wanted to they're like yeah but like what did they say they said yes they said they they said they can go buy one but like why like i don't know like they were just like it'll pass right Right. Travelers, especially American ones, do not feel that way. They are on they are unimpressed by the stiff upper lip of the Europeans being like just grown and barret and are demanding.

17:02Seth Borko: Kind of these American luxuries. And it's not just America. I mean, the Middle East and in Asia, they also have air conditioning. And so travelers are increasingly demanding this out of Europe as well. And so how this is affecting hotels and what they have to do and how they have to kind of retrofit their buildings and think about cost and all that stuff. So that was that was a really interesting piece that we that we did this week. And say it's the same thing with the seaweed.

17:30Sarah Kopit: Let's let's talk about this AC situation, because I think this is a great topic. Here's the stat. I think that Taz put in the article. AC penetration across Europe sits around 20 % versus 90 % in the US and Japan. It's a big deal. And I think we are understanding this. And this, you know, if you'll forgive me and our listeners will forgive us, me particularly, for talking too much in economics terms. But this is what we call properly an externality. It's a cost that is created by someone else and borne by all of us. And it's not fair, but kind of this is very much an externality and it's become an infrastructure cost.

18:11Sarah Kopit: And it's it's real. I know people, many people who have traveled to Europe and will just will not travel in the summer. They've heard enough of this. It's now it's no longer the first summer. It's happened multiple times. And it's not worth it to go during the summer or at least not to southern Europe.

18:28Seth Borko: And I know it's funny, though, because maybe the while we're talking specifically about hotels now, because it is their infrastructure problem because they want the tourists. But it just strikes me about how like the municipalities or some of these locations, destinations, they don't they don't want the tourists anymore anyway. Right. Especially in the summer. So there's that kind of sticky wicket. Yeah.

18:56Sarah Kopit: I mean, and there are elements outside the hotel's control. If the attraction that you're going to or the attraction is being outdoors and it's too hot to be outdoors. Well, I don't even need a hotel. I'm just not going to go. And it matters, too, for, you know, short term rentals and Airbnbs. I also know many people who specifically refuse to book a short-term rental accommodation in Europe in the summer because it will probably not have an AC, whereas the hotel will probably have an AC. And so I think this is a great example of why climate reporting is an important travel beat because it's not just about the sustainability goals, which we kind of call not dead in our megatrends.

19:36Sarah Kopit: But, you know, we called that the industry is moving on in our mega trends. But whether we're moving on or not, whether the sustainability goals are not, it's sort of like this is going to significantly impact like commerce and distribution channels and booking flows and traveler flows like ready or not. You know what I mean?

19:55Seth Borko: We've moved on from saving the world to like when it starts affecting the bottom line, when it starts affecting how much money the companies are making. It's like we had to get past it had to get to that place. Yeah. It had to hit you. It had to hit him where it hurts.

20:14Sarah Kopit: Well, back to markets. Back to markets. Back to economics. for the market. I'm so sorry, dear listener, but the problem with an externality like climate change is that it's not priced in. And so when a problem gets priced in, the market can react like it did in the case of franchise fees. And when it's not priced in, it cannot react until it becomes priced in. And now it is starting to get priced in. And now we are going to find, hopefully, I mean, we'll see. We'll see. It is only starting to get priced in, but it's a huge problem and a huge needle to move. And this idea of these externalities and these costs that are increasingly being borne by hotels that were sort of like not a classic.

20:56Sarah Kopit: Hard to put in your P &L. Oh, I got to hire staff. I got to pay for food. I got to pay for fuel. I got to do this. This Sargassum story is very similar where it's like, what's in the budget for seaweed to clean up? Sargassum is basically a fancy word for seaweed. Seaweed, yeah. and i mean we've covered this before but um the thing it's a big problem yeah it's another big

21:22Seth Borko: problem i know i know i said this before but i'm a huge like fan of the mexican riviera as they call it and i and i go almost every year with my family like we love it down there and this was the the sea we we've watched it get progressively worse this was the first year i went in june i thought maybe it'd be okay it was not this was the first year where i said i will not go back in the summer like i i said like we will not go back in the summer until they fix it so but then many people i talked to are like well sarah there is no fixing it i'm like yeah but um you know hotels are slashing their prices because people like me like there's a bunch of people like me you know in mass, you know, by orders of magnitude.

22:12Seth Borko: And so they're, they're cutting their prices. And so they're, they're trying now, you know, to put these big, you know, infrastructure situations out there in the, in the water in order to block the seaweed, but it just kind of leaps over it and gets around it. But it's not, this is not just a, the hotels are bearing the brunt of it, but this is a government problem. This is a, you know, it's a government problem. It's a destination problem like take your take your pick everybody is affected by this so it it's interesting to see kind of like we hit we i think they hit a critical junction this summer with the seaweed and so now you know it's kind of like a bunch of money is going to be thrown at this problem and it's really going to be interesting to see if that like pot of money can fix it.

23:08Seth Borko: Cause we've seen this before. We've seen it happen where this like seemingly unfixable situation comes to pass, but you know, governments are really powerful. Yeah. Yeah. Yeah. I mean, this terrified me as a child, you know, I think I, I think I gave up my hairspray in the 80s because of this. And, you know, that's not something we, that is not something, if we have a listener out there who is under 30 years old, they're just going to be like, huh? Like what? Google it. You know, you'll understand. But yeah, we don't talk about that anymore because we, we, the royal we, did a whole bunch of things and I threw away my hairspray and, you know, and it fixed the problem.

23:53Seth Borko: So it'll be interesting to see if that can come to pass with the seaweed situation as well. Yeah.

23:59Sarah Kopit: And I think I think definitely shout out to Tasman on your team. And I think like the collective theme on these two stories is these climate based externalities reaching a tipping point where they are having hundreds of millions of dollars of impact on bottom lines, on private sector and on tourism flows, not on the margin, not a few marginal percentage tourists here and there, but in dramatic ways that are swinging trends and revenues and profits in significant ways that we're finally hitting a tip point where it's going to call for collective action or not collective action, but like collective industry action, potentially collective government action in both Europe and Mexico, which if you combine those together, I mean, that's got to be a huge, that's a huge amount of the world's tourism economy right there.

24:51Sarah Kopit: And so I think, you know, one of the things that we talk about a lot on this podcast is these sort of things. And this is what I think we sort of one of our purposes to do is to find these trends and, and try and get you ahead of them. And I think this is a poor attempt at, at synthesizing the whole episode so far. But I think the collision between franchise fees is an example of that. I think some of the times when we talk about affordability, when I because the other thing I think about with summer travel is just okay, well, you can't go to Europe, it's too hot can't go to mexico the beaches suck where can you go can you go to the law i mean i'm in new york can you go to the upstate new york can you go to long island beaches no it's too expensive so i think and it's too expensive at the same time okay and hotel owners are gonna have to put all this money behind seaweed remediation or ac remediation or whatever and it's like well where are their margins going they're being squeezed too so i think that's sort of the maybe the bigger point is that there's this whole series of fundamental squeezes coming from affordability, from climate, from cost pressure and margin pressure that I don't want to say coming home to roost per se, because that implies that we like deserved it, but that will require solutions.

26:04Sarah Kopit: I don't know. That will require solutions.

26:06Seth Borko: Just humanity in general, not necessarily the hotels, just just us like humanity. We did this. We deserve it. It's fine. Have you ever stayed, Seth, at a kind of heritage tourism site? Like a historical destination? Have you ever done that? I haven't. But Colin. Colin wrote about it this week.

26:29Sarah Kopit: What is an example of a heritage tourism site?

26:32Seth Borko: Well, I guess, you know, I'm probably using the wrong word because I think there are a lot of heritage tourism sites that are basically just historic ruins and monuments and stuff. I'm really talking about a place that was one thing, and now it is another thing. When I was in Mexico, I did a cool one in Oaxaca, actually,

26:55Sarah Kopit: which was a great city. Have you been? No. No. I stayed. That's a fun Mexico. I stayed in a old Spanish mission that had been converted into a really nice hotel. So I do. I think those kind of conversion. That's what you're talking about, right? Like when you take like a mission, you convert it to.

27:14Seth Borko: Actually, I did stay in one. It was in northern Michigan in Traverse City. It was a former psychiatric facility. That was. That was turned into hotels and restaurants that was apparently haunted.

27:29Sarah Kopit: Was it haunted?

27:30Seth Borko: They say it is. They say it is haunted. I did not see a ghost.

27:34Sarah Kopit: Can I ask you an important question? Yes. Before we get deeper into this, but for the record, on the record, for the podcast, Sarah, do you believe in ghosts? I do not. And that's why, because I love horror movies, too.

27:47Seth Borko: And anyone who wants to talk to me about horror movies, scary stuff, like, I love it. And I can talk for hours about it. but I don't I think one of the reasons is is because I don't I don't believe like I don't really find it scary I think that's I think that's why I think that's the trick I think people who love horror movies don't really find them scary yeah yeah and people for whom the

28:10Sarah Kopit: exorcist is a documentary correct terrifying exactly exactly such a good movie by the way

28:18Seth Borko: the exorcist one of my favorites right but wait we're on the topic of of heritage tourism I like

28:24Sarah Kopit: this idea i stayed i also stayed in a um for my sister's wedding we stayed at a hotel called cavallo point which is an old army base and army barracks that have been converted into hotels and i loved it i absolutely loved it but psychiatric hotel is psychiatric hospital hotel is definitely

28:42Seth Borko: a bit freakier yeah and what do you have in mind about a japanese prison that has now been turned into a$900 night hotel. The Nara prison.

28:55Sarah Kopit: Do we think the prison is haunted? Do we think the hotel is haunted?

28:58Seth Borko: Probably. I mean, yes. Like, let's just go for yes, because I think that drives up rates. You know, if you can add it. I think if you can add a haunted element to your property, I think that has been shown to increase demand.

29:12Sarah Kopit: So I like this idea of heritage tourism, but this is, okay. I mean, psychiatric hotel is pretty damn, psychiatric hospitals pretty damn close to prison especially depending on the air this is a bit crazy though so i've actually never heard of a prison being converted into a hotel what did they

29:31Seth Borko: do i mean i guess you know it's not a hotel but they did make it a tourist destination is like out like the alcatraz's of the world you know i was told that's gonna be an active hotel i thought

29:41Sarah Kopit: donald trump was making that an active prison again active prison again sorry back to prison

29:45Seth Borko: I remember that too. I would stay at Alcatraz. I'm also a big fan of The Rock. The movie.

29:52Sarah Kopit: Oh, the movie. Not the actor? The movie? Yeah, the movie's great. The Rock.

29:56Seth Borko: Yeah, the movie. Definitely the movie. Nicolas Cage. You know, all of that. So, I would definitely stay there.

30:04Sarah Kopit: I feel like this is a joke, a punchline waiting to happen. You think these hotel rooms are small. They feel like prison cells. I don't know. But apparently, it's really nice.

30:15Seth Borko: It's big business, and these are expensive hotels, too. See, that's the thing. People are not taking these historical places and turning them into the Econolodge. We're talking$1 ,000 a night here. These are luxury. You're there for the experience. You're there for the ghosts, the good food, the luxury accommodations.

30:39Sarah Kopit: So this is a luxury. So wait, let's go over the story. This is a luxury hotel. I just want to cover this real fast so it's Hoshino Hotel which is Hoshino Resorts which is like actually a very high end and pretty well respected or not pretty, very well respected Japanese luxury brand and they opened they turned it into a prison into an all suite property yes and I suppose you don't have to share it with other inmates, I suppose you do get the suite to yourself, I'm assuming I would assume so

31:13Seth Borko: although people would probably pay extra if that wasn't the case too you never know it's all about being creative right and having a having an experience

31:25Sarah Kopit: i kind of lost i think what we're missing what we're missing is that this is not just like a random uh prison it was right built these are in the what's what's the story here no these are just

31:37Seth Borko: these are historic sites i mean there's a reason they choose them to to it's to create an experience Well, actually, I mean, I did stay. I had the I stayed at the OO in London. It's a raffles. And it's let's see, what does OO stand for? Office of War. Oh, old war organization. Yeah. No, I I mean, it's the most amazing thing. Like you, you can stand on the staircase where Winston Churchill would give his like daily message to the staff that running World War Two, this is where he ran World War Two. And the hotel has done just a fantastic job, unsurprisingly. But like, for example, in the main staircase, when you go in, they'll point out to you that like this one side of the staircase, like the marble or whatever the material is, it's worn down.

32:31Seth Borko: And it's because Winston Churchill used to come by every day and like kind of like, I think it's like a lion's head, like pet the lion's head. And everybody else did, too, because he did it. And so they kept that part of the, you know, and so and I that was the thing. I mean, I mean, all raffles are nice hotels. Of course, they are. They're ultra luxury hotels. But this one, it really truly was like staying in a museum. They have a bar in the bottom called Spy Bar, which was where they kept the identities of the people who are undercover, the spies, MI6, whatever, who were going, you know, across enemy lines.

33:13Seth Borko: That's where like their like actual identities and their legends were kept. It's now a bar in the bottom of Raffles.

33:20Sarah Kopit: That's literally the plot of every James Bond movie, right? The list of all the spies behind enemy lines is going to get sold to XYZ.

33:28Seth Borko: That's exactly right. And, you know, when you go into that bar, they take your phone. Like I have no pictures. And actually they don't take it, but they put a little piece of tape over the camera. and it was funny when I had a reservation to go down there and I I told them upstairs they you know there's a lot of people there they're looking after you when you're at the OO at the raffles you know and I said oh I'm going down to spy bar and somebody said oh let me take you and being midwestern I was like no no it's okay I'm sure I can find it and they were just like no you won't be able to find it let me take you because it's behind like a like a plane door that's like, you know, completely built into the wall.

34:14So, yeah.

34:15Seth Borko: And you know, that was the time I also had, I did some market research for myself. That was the time that I had the non-alcoholic martini, which I ordered in the exact same way that James Bond would have. That's what I told the waiter that I wanted. And it was terrible. As I've said this before, like the mocktails have come a long way. A lot of them are super delicious. they have not cracked the martini i don't know if they ever will crack the martini a well cracked martini is not yes fair but that it is what i ordered at spy bar that was my um well i do love

34:54Sarah Kopit: this concept of i guess what we're calling it heritage resorts and heritage tourism i think heritage tourism also has the condition of visiting family heritage but this specifically is this like and i think colin our correspondent talks about it in the in the article he wrote about a cycle of heritage where these great, often landmarked properties that basically are not fit for purpose for modern commerce, can't be torn down, can't be modified, but require constant maintenance and upkeep to preserve and are worth preserving. And it's kind of the opposite of over-tourism, where tourists take away from the local fabric and the local community.

35:37Sarah Kopit: And it's saying, well, wouldn't it be cool to stay in a hundred-year-old Japanese prison or the old war office or an old U.S. military base on Marin or an old Spanish mission in Oaxaca? And it's a great use of tourism assets and dollars and investments. And I keep shoehorning free markets into this conversation, but it's also a great way of using the market and tourism revenue to fund this sort of preservation.

36:07Seth Borko: I completely agree. And I have one small personal story on this that, which is kind of like in the same vein. When after my grandparents died, we found my great, great grandfather's World War I, not even World War II, World War I footlocker. And it had some stuff in it, but it was, you know, it was kind of in bad shape and the leather was kind of worn and I don't know I fixed it up I took some mineral spirits to it and patched it all up this was my dad's grandfather and uh and he's like well do you want to take it and I said oh that's okay like you keep it and he said he said it's just gonna sit up in the in in the in the barn like you take it he's like what are you gonna do with it and you know I live in a little apartment in Brooklyn.

37:00Seth Borko: And so I was like, I don't know. I'm like, I could use it as like a coffee table, a side table. But I'm like, I felt like that was like insulting. And he's like, are you kidding? He's like, he's like, I feel like all of like, all of your ancestors would be so pleased that you were like headed out, show people, tell this story, talk about them. And I think that's a little bit about what's happening here. Like these stories that come with these places, they are being told. They're being told every time somebody stays there. It's history. It's living history. And it's a good thing.

37:35Sarah Kopit: I think it's a great thing. And I think I would even say it's a part of Colin's story here is he contrasts this new Hoshino prison resort to some other conversions. And he points out that there's a Sultanahmet prison in Istanbul, which became a Four Seasons. the Sultanahmet foresees incredible property but it kind of sometimes hides the fact that it's a prison and in fact there are a lot of buildings that will do that there are a lot of buildings with great old bones that get upcycled and repurposed and and um you know those things are not necessarily what's new right like so i just to clarify the point of this story i think it's it's exactly what you're saying about the story on end of it where it's like it's not just upcycling or repurposing an old building it's making the story of an old building a part of the tourism draw in a way that generates a premium premium in revenue that pays for the restoration and the remembrance and the and the history and so um and to your point about

38:45Seth Borko: keeping the stories alive it's not about just yeah in the bones and creating new stories it's

38:50Sarah Kopit: about keeping not just the bones of the building alive, but the stories of the building alive. It's pretty cool.

38:55Seth Borko: It is pretty cool. All right. Are we going to do winners and losers this week? I have to think of one.

39:02Sarah Kopit: Yeah, let's do winners and losers. I mean, I like doing winners and losers. I would say, I don't know if I have a, do we have a loser this week? I don't have one. It always feels a little mean-spirited. The more we do this, the more it means. It's weird.

39:19Seth Borko: we need we need to we need to like get our get ourselves together and and uh and you know grow

39:26Sarah Kopit: some fangs you know well okay how about this the loser of the week is um european sustainability goals as they all invest in ac and they burn a bunch of freon into the atmosphere. We can tie back into one of the stories we discussed. I have a bunch more winners that I think are more fun. Okay, let's hear the winners. Did you see that Space Conferences business got bought?

39:57Seth Borko: I did.

39:59Sarah Kopit: We love talking about space.

40:01Seth Borko: I think that's a great winner of the week. I think space and ghosts.

40:06Sarah Kopit: Space and ghosts.

40:07Seth Borko: Space, ghosts.

40:08Sarah Kopit: Ghosts are a loser of the week because you don't believe in ghosts. You need to believe them to exist. And space is our winner of the week.

40:16Seth Borko: I did. You know, I mean, not only so it is unsurprising to me that that that happened because, I mean, there is this story and then there was another story, which was that the Trump administration, they it kind of it ties into this environmental story that we're talking about, too. They relaxed a bunch of environmental laws in order to fast track, like, I guess, space infrastructure, like rocket launches. Right. So the thing we are not to space tourism yet. I think that if space is related to the travel industry, I think we talked a little bit about this last week, it's going to be like to a more corporate travel situation.

41:01Seth Borko: Like people are going to work in space soon. People are going to work in space sooner than they're going to vacation in space. I guess let's say that. So there's all sorts of space related money to be made now. And so when there's money to be made back to the free markets, people are going to buy and sell and do deals. And here we go. Love it.

41:23Sarah Kopit: Yeah. Space tourism. We're going to continue to shoehorn this one in. I think that's definitely a winner of the week. 19 Group is acquired Space Com Expo Europe. A space industry event. I would love to attend a space industry event.

41:39Seth Borko: Can you imagine? It's probably got the most interesting like attendees that you'll ever that you'll ever meet. Right.

41:46Sarah Kopit: Do we ever hear from Gordon on how Farmborough Airshow was? That's another thing that's on the same line of space, aerospace, all that stuff. It's definitely conference season. Can we make that our winner of the week? Because we just had GBTA, the Global Business Travel. We had Farmborough. We've got this space. I think it's conference season. Another winner of the week is people are out meeting again. People are gathering. People are connecting. We're putting money behind it, putting tourism behind it. Continue to be excited by that.

42:16Seth Borko: And that's great, too. We love that.

42:19Sarah Kopit: I think it's the end of this episode.

42:20Seth Borko: I think it is, Seth. I think that's it. Thank you, everybody, for listening. Yeah. We will see you next week.

42:27Sarah Kopit: See you next week, everyone. Bye.

42:37Seth Borko: ZS is a global consulting and technology firm that partners with companies to improve life and how we live it. Working with the world's top hospitality brands, ZS brings together data, science, technology, and human ingenuity to transform ideas into customer loyalty. They're ready to help you elevate guest experiences, improve operations, and uncover preferences and motivations through their AI-powered solutions. With more than 1 ,700 clients in over 170 countries, ZS has built the expertise, fortitude, and vision to help you deliver impact right where it matters.