Consultants less valuable than polling residents

For the last few years, Marin County has continually spent large sums of money hiring housing consultants.

These consultants usually come to Marin from other parts of the country. I suspect most really know nothing about our unique lifestyle. Thus, we ultimately end up with a lot of housing element babble and no real solutions. I find some of their information to be so far-fetched, it’s laughable.

My suggestion would be to ask Marin’s residents directly as to what they are facing as homeowners and renters in regard to their income, expenses, mortgages, leases, rents and their rights. That invaluable information would be a lot cheaper to collect than hiring another consultant.

— Sandra Macleod White, San Rafael

Novato’s empty buildings can become more useful

The recent article on Novato’s vacant buildings (“Novato to weigh ideas for abating vacant, blighted buildings,” July 19) is a timely summary of the problem.

This is a worldwide issue. It is especially troubling in San Francisco. What is needed is a combination of relaxed building code and occupancy permitting so live/work and multiple uses can form congregate situations.

This is not new. While “cohousing” is succeeding in a number of California locations, some European cities are producing environments where families and individuals, including elderly, can create a community that is economical, stable, friendly and supportive.

Using organizations like Habitat for Humanity, “sweat equity” projects can save older structures, reducing the cost of rehab. This reduces the amount of construction waste that goes into landfill.

In San Francisco during the 1970s, artists swamped commercial building vacancies. They reshaped these buildings as live/work opportunities. San Francisco’s city planning and inspection offices became aware of the dangers to health and safety at the same time they realized it was a solution to the mass vacancies.

Art groups worked to create new guidelines to address dangerous potential conditions. This avoided disasters like the terrible 2016 Ghost Ship warehouse fire in Oakland, where officials appeared to simply ignore the developing situation.

The new guidelines allowed owners to rent buildings to artists and craftspeople that would otherwise be unused spaces, allowing each artist to create the space and utility (electrical/plumbing) infrastructure.

Costs were low and inspections maintained safety. Unfortunately, this created a “loft” living movement where architects, lawyers and other professions competed for the spaces, driving up prices by the 1990s.

— Niccolo Caldararo, Fairfax

Novato City Council is only standing in the way

I am writing in regard to the article published July 19 with the headline, “Novato to weigh ideas for abating vacant, blighted buildings.”

From my perspective, it appears these properties are vacant because the Novato City Council is in the way of a buyer and seller getting together. This has been the case for a long time.

In the history of our country, there is no reason why the owner of private property needs the OK of the government, local or otherwise, to do a transaction. Otherwise, property rights have no meaning.

The IJ’s recent editorial (“It’s time Novato addressed issue of long building vacancies,” July 30) implies that the City Council should take its time to make long-overdue decisions about matters the council is inept to deal with. I totally disagree. Doing so will only ensure that transactions do not occur in the natural flow of buyers and sellers operating in their own best interest.

The council should have no say in all this. I believe in the foundational axiom that the more government gets involved in a matter the more it gets the matter fouled up. I dare anyone to challenge that assertion.

Simple capitalism has been solving situations like this for over 233 years. If it didn’t, we would be like a lot of other countries — eternally stuck in a morass.

While time is being frittered away by the Novato City Council, other communities are outgrowing Novato readily. The City Council’s range of authority should be substantially reduced.

— Roland Underhill, Novato

Schools should look into Linux computers

I am writing in regard to the article published July 25 with the headline, “Marin schools face expirations of COVID-era Chromebooks.”

It’s a pity schools in the state, or perhaps even across the country, can’t get together and each contribute a small amount to the Linux operating system community to provide money to encourage the development of open-source software meeting their students’ needs.

Computers can last many years with a Linux OS — there are still perfectly good Linux systems that run on older, less powerful machines that have been around for many years.

— Edward Clapp, Corte Madera

San Quentin should be closed immediately

After closely reading the Marin IJ recently, I feel prepared to critique Gov. Gavin Newsom’s plan to turn San Quentin State Prison into a Scandinavian model favoring rehabilitation over punishment.

First, on July 27 the IJ picked up an article by the Los Angeles Times headlined “Newsom’s signature move: Jam the Legislature.” It pointed out his disputed strategy of ramming his major policy programs through. The author stated that Newsom “has a penchant for publicly manufacturing a sense of urgency and giving lawmakers as little time as possible to act.”

The next day, the headline on another LA Times article in the IJ read, “Newsom’s San Quentin plan advances despite questions.” This $380 million plan is a perfect example of the above strategy. His lack of information is particularly alarming to most, as is the rushed timeline and high cost.

Doubling down on rehabilitation-based incarceration might have merits, but why do this at San Quentin? According to the article, the program is mostly focused on inmates with shorter sentences because they will be released sooner. But San Quentin, a male-only prison, has a high percentage of “lifers.” Why not try this experiment with female inmates too?

The state wants to close several prisons. Why not close the oldest, most expensive one to operate in the highest cost of living area for its staff? Prisons should be in small markets where an influx of revenue is needed, and housing costs are moderate.

This property should be turned into a state-of-the-art transportation hub with retail, commercial, and residential buildings, plus parks. The ferry terminal should move there.

This would shorten the commute to San Francisco and would eliminate the agonizingly slow boat speeds between Larkspur Landing and San Quentin (mandated to minimize wave action in the shallow bay).

— John Neuenburg, San Rafael

Ballot transparency measure must go further

It is good to read about the discussion the state has created by requiring the naming of top supporters of ballot measures (“Marin County opts out of law aimed at ballot transparency,” July 23). However, I believe that all tax ballot measures should at least also include the total local, state and federal tax burdens for taxpayers, in addition to the additions each measure adds to that burden.

Ballot measures for raising or continuing taxes should also include a comprehensive list of future anticipated tax measures and their anticipated tax burdens, so that the public has a complete context upon which to base a more fully informed vote.

Local authorities could require these ballot enhancements, but the state needs to step up and get the process begun, the sooner the better.

— Randall Knox, San Rafael

The post Marin IJ Readers’ Discussion board for Aug. 5, 2023 – Marin Unbiased Journal appeared first on DAILY SAN FRANCISCO BAY NEWS.

Many ways to help kids through difficult spots

I am writing in regard to the editorial by the IJ article concerning the partnership between the Point Reyes Seashore Association and Camp Avary for children with incarcerated parents (“Camp’s Pt. Reyes partnership a winning connection for underserved group,” July 27).

Camp Avary, like the Big Brothers Big Sisters of America program, gives kids hope and a way to cope day to day, other than staring at the internet. As a 10-year “big brother” whose “little brother” was going through many of the same things I did growing up, I shared some of the healthy activities I used to cope with it all when I was growing up. Our Saturday get-togethers involved fishing the lakes (Bon Tempe or Laganitas) or taking in a ball game.

I entered the program as a person wondering whether I would have the stuff it takes to be a parent. After one year of our match, I knew that I could bring something to the parenting table. My “little brother” would later become godfather to my son.

Although he did not graduate college, my “little brother” did become a Renaissance man by learning the plumbing and butcher trades. Given his language skills, he also did well in his work on the suicide prevention hot line.

If you can spare the time to be a big brother or sister, it is well worth the effort.

— Rick Johnson, Novato

Don’t allow one person to impact traffic for all

I am writing to express my concern of the events of July 21 and 22, with respect to the closure of the eastbound lanes of Richmond-San Rafael Bridge during one person’s mental health crisis (“CHP: Safety concerns necessitated Richmond-San Rafael Bridge closure,” July 25).

I would implore our leaders to please review and come up with a more expedient plan for future incidents. I am very surprised that there has not been a greater uproar over this situation.

It is unacceptable that one individual could disrupt thousands of commuters throughout Marin, Sonoma, Contra Costa, Alameda and San Francisco counties. I would expect that all of you must share this concern and frustration.

I have been worried about dedicating the third lane on the westbound upper deck of the bridge to bikes and pedestrians. With only two lanes open to vehicles, any hiccup results in stopped traffic. Now it is a concern that one disturbed individual can access the bridge and completely block it for many hours. People were stuck for hours with no food, no water and no facilities — all on an afternoon with air quality so poor it was designated as a “Spare the Air” day. Cars were in danger of running out of gas or having their electric battery run out. People in poor health could have become ill.

This all happened because of one person. Certainly there had to be steps that could have been taken to remove this individual quicker. Accommodating these people is not in the interest of the greater good.

— Kim Sandholdt, San Rafael

Put focus back on using public transportation

Why am I reading reports that Bay Area transit agencies are running out of money, yet the traffic jams on Highway 101 are back to pre-pandemic levels? Nowadays, many people in our area are working at home either most or some of the time. When considering the cause of these related observations, I can only deduce that former transit riders must now be driving.

The U.S. Environmental Protection Agency estimates that 29% of greenhouse gas emissions are caused by transportation. To help address this locally, I think Marin County officials have done a wonderful job gathering information and providing rebates to encourage emissions reduction.

Let’s not forget about the opportunity public transit provides to shrink our carbon footprints.

— Karen Andresen, Novato

Too many off-leash dog parks across Marin

Judy Spelman’s recently published letter to the editor suggests that a beach in Tomales Bay State Park (Millerton Point) should be opened up to off-leash dog recreation, adding that she hopes to garner letters of support for her initiative.

In opposition, I write in support of the regulations that Spelman seeks to have removed. I don’t find her argument that “managing a leashed dog can lead to human falls (and) limits freedom to focus on nature” to be persuasive. People at risk of falls caused by walking with a leashed dog can avoid injury by recreating in a less challenging environment, or by recreating without their dog. Additionally, I would say that, because dogs are domesticated pets and are not part of nature, walking without a dog (leashed or unleashed) is the best way to “focus on nature.”

Aside from chasing, maiming or killing wildlife, dogs also generate waste that can spread diseases to wildlife (and people). The Environmental Protection Agency says dog waste contains hazardous pollutants. Given that dog waste can foul nearby water bodies with pathogens, it is sensible to conclude that dogs should not be allowed on any beaches, whether leashed or unleashed.

Spelman’s group seeks to remove leashing regulations at one beach, but she ends her letter with the hope that “other parks will follow our lead.” In opposition, I will end my letter with the hope that Spelman’s efforts fail, and that future attempts to rewrite sensible regulations pertaining to dogs in county, state and federal parks are ignored. Far too many public outdoor spaces in Marin have been converted into dog parks (aka “dog toilets”) to the detriment of wildlife, the environment and public safety.

— Byron Wilson, Kentfield

Supreme Court correct to flip affirmative action

Last month, the U.S. Supreme Court correctly ruled that race-based preferences (aka “affirmative action”) are illegal in direct contradiction of our Constitution and civil rights laws.

In her recently published Marin Voice commentary (“North Bay Leadership Council CEO responds to affirmative action ruling,” July 15), Cynthia Murray disagrees and is seeking a workaround under the banner of DEI (diversity, equity and inclusion). She lauds the virtues of a “diverse” workforce without citing specific examples.

Murray is far from alone. Despite scant evidence, it appears to me that nearly all politically liberal people agree that “diversity” is more important than a merit-based system.

Some, including President Joe Biden, appear to not only look to flout the Supreme Court’s ruling, they support packing the court with additional justices who are like-minded.

We should demand a higher burden of proof for a policy that I am convinced goes completely against the principles of equality under the law and a color-blind society.

— Michael Hartnett, Greenbrae

Understandable fear of police leads to injuries

My first time as a juror was in the 1980s in Honolulu. The defendant was a young man who led police on a high-speed chase. His defense was that he was afraid the police would beat him up if he stopped. When he did stop, it appeared to everyone that the police did just that. Our jury voted unanimously to acquit. I was reminded of this seeing the horrific traffic stop in Ohio (“Black man attacked by Ohio police dog during traffic stop,” June 23).

The 23-year-old man who was driving a semi-truck with a missing mud flap said he was afraid to pull over while being chased by the Ohio State Highway Patrol. When his truck was finally stopped with the help of tire-deflation devices, he exited the truck with his hands raised. On the video posted online, a member of OSHP can be heard telling a Circleville Police Department officer not to release a police dog on the suspect, yet the local officer did anyway.

The young man now faces charges of failure to comply, a fourth-degree felony. Where is the justice in this?

— Kay Noguchi, Terra Linda

The post Marin IJ Readers’ Discussion board for Aug. 2, 2023 – Marin Impartial Journal appeared first on DAILY SAN FRANCISCO BAY NEWS.

Skift Take

Airport hotels can become lively attractions in their own right. Hotels can sell five-hour stays as easily as 24-hour stays. Not every hotel has to be sold via online travel agencies, MCR Hotels CEO Tyler Morse said.

— Sean O’Neill

Tyler Morse, Chairman and CEO of MCR Hotels, revealed that his company had acquired about 70 hotels and two software companies during the pandemic when he spoke at the Skift Future of Lodging Forum.

Morse expects more good hotel investment deals to emerge because he predicts interest rates will decrease again because of potential banking contagion. MCR is set to close on four hotels this week and has 12 more in the pipeline.

In the discussion with Skift founder and CEO Rafat Ali March 29, Morse said he owns 150 hotels in 37 states and operates under 17 different brands, including the iconic TWA Hotel at JFK Terminal 5. That makes MCR the third-largest hotel owner in the U.S., Morse said. Morse also discussed why he’s a fan of airport hotels and why Residence Inn is one of his favorite brands. (You can watch a full video and read a transcript below.)

MCR has also invested in hotel technology to improve the industry’s software systems, which Morse finds lacking. It has acquired two hotel technology businesses, StayNTouch and Optii, and it has a “pipeline” of other investments.

Interview Transcript

Ali: All right, folks. Now comes the best or worst part of the day. You guys will decide. The next two interviews are mine. This is the Rafat hour, the last hour left for the day. So thank you for staying. Thank you for being here. Two very different conversations to come, one from… You don’t like to be called a hotelier. We’re going to talk about why you don’t like to be called hotelier. But hotel owner, investor. And then the last one is Catherine Powell, who’s the global head of hosting for Airbnb. Couldn’t be more different in terms of businesses, but obviously there’s a lot of commonality. Lodging, which is staying of humans, is definitely the common part. So thank you Tyler for coming. You obviously don’t have business currently in Europe.

Morse: Working on it.

Ali: Working on it.

Morse: Trying to change that.

Ali: Trying to change that. You’re the third-largest hotel owner in the US.

Morse: Correct.

Ali: That happened over the pandemic. You took a contrarian strategy of going all-in, buying hotels when the whole industry was shut. So explain your contrarian strategy there first and why.

Morse: When there’s blood in the streets, that’s when you should be buying. This is not some Nostradamus-esque philosophy. It’s been around for a long time. The lodging business is a terrific business. The hotel business is great. You heard one of the speakers say earlier, it grows at a 4% CAGR and has for the last hundred years. Supply grows at less than 2%. Those are positive tailwinds. So COVID, if you look at what happened in 9/11 or even farther back in the early ’90s, and then in the global financial crisis, the hotel business always recovered, and then some. So it’s the same concept. When everyone else was frozen in panic, we made a lot of terrific investments in hotels and software companies, hotel-related investments.

Ali: And how many hotels did you buy during COVID?

Morse: I think about 70.

Ali: And there’s still blood in the water or streets. Do you say street or water? One of those.

Morse: Blood in the streets.

Ali: In the streets.

Morse: Chum in the water, blood in the streets.

Ali: But not a zero interest rate environment. Joe almost cried on stage. The guy from Starwood almost started crying on stage. So tell me-

Morse: Don’t be hard on Joe.

Ali: Don’t be hard on Joe. Joe, we love you. What’s your sentiment now in terms of buying? Has it stopped?

Morse: So the Fed in the U.S. has raised interest rates 500 basis points in 12 months. That is the steepest increase ever in the history of the world. And I would say, as of about three weeks ago, that was definitely annoying. Our cost of debt was increasing. And then out of nowhere comes Silicon Valley Bank and a run on the bank and a run on a variety of other banks. And Credit Suisse I thought was a terrific bank. Apparently not. So they’re-

Ali: You want to hear our story?

Morse: Well, they’ve been wiped from the face of the earth. Are you a depositor or a borrower?

Ali: Silicon Valley Bank, every cent of my money was in Silicon Valley Bank.

Morse: All right. Well, now you’re a client of First Citizens.

Ali: So now we’re a client of UBS [Skift has three accounts now, including with UBS], which I’m so glad it’s not Credit Suisse. So it would’ve been the other way. Would’ve been… So anyway.

Morse: But three weeks ago, the world changed. And I am of the opinion that there’s going to be some real banking contagion that is going on in the next 6 months, 12 months, you name it. You’re going to see other runs on other banks. They might be the small or regional or mid-size banks. But there’s some real pain in the system. Silicon Valley Bank bought a lot of long-dated, low-interest-rate debt, and they got crushed. And if you look at bank’s balance sheets, that’s the same thing for almost everybody. So the other shoe is going to fall. I think interest rates are about to go back to zero. So we’re going to be in a high inflation environment-

Ali: So let me-

Morse: … with zero interest rates.

Ali: … repeat what you said. Interest rates are going back to zero. You [inaudible]-

Morse: Maybe not zero. One or two. But I mean, if you look at the forward yield curve, it used to be like this going into 25 and 26. It is now like this. Swaps have come down 125 basis points in the past 10 days. The market is pricing in banking contagion. So that is going to keep deal volume lower because it’s going to be very hard to borrow right now.

Ali: Right. With uncertainty.

Morse: So that’ll decrease transaction volume. But if you can buy stuff, I think there are going to be good buys out there.

Ali: So my question is, are you buying?

Morse: We are. We’re closing on four hotels next week. We have about 12 hotels in the pipeline right now.

Ali: And how are you financing those compared to what you were doing a year ago?

Morse: We can still borrow. We have a bunch of house banks that have been lending to us for the past 20 years. Spreads have gone up. They’ve gone from 250 over SOFR to 350 over SOFR. So again, annoying but not catastrophic. We bought a big hotel about a month ago at a 12 cap. So there are attractive deals out there, but not as many as there were in 2006 or in 2017.

Ali: And so you’re a fan of airport hotels. So for those of you who don’t know MCR, actually explain MCR because this is Europe. You may not be as known in this part of the world as you are in U.S. Give a quick overview. I know we jumped quickly into it.

Morse: Sure. So MCR, we own 150 hotels in 37 states. We are vertically integrated. So we’re an investment manager and a hotel operator. So we have about 10,000 employees. We run the hotels and we operate hotels under about 17 different brands.

Ali: And they’re showing TWA, which is your iconic hotel at JFK Terminal 5.

Morse: We converted the old TWA terminal into a hotel about four years ago. I used to be a baggage handler for Delta Airlines at LAX. It was an amazing job with the light sticks and driving the plane back into the alley, loading the L-1011 with the FMC loader.

Ali: Yeah. He’s a total athlete, as you’ll see if you go to this hotel.

Morse: Slinging the bags. Remember those old Samsonite bags that had the two locks on them?

Ali: Yes.

Morse: I’d be wearing knee pads in a narrow body plane at 727 or ’57. And you’d fling the thing to the far side of the baggage compartment. And sometimes if it hit just right, it would torque the locks and the bag would pop open, and then we’d have to put all the underwear back in the bag and stuff like that and send it on its way. But that was a whole separate story. So I love the TWA project. TWA was an iconic airline. It was TWA and Pan Am that really controlled the global skies. TWA was owned by Howard Hughes, and he built this building. He spoke with Eero Saarinen once for five minutes and he said, “I want the greatest airplane terminal the world has ever seen, and I don’t care how much it cost.” So if you’re an architect, that’s the greatest commission ever. So Eero Saarinen designed the building. He also designed the St. Louis Arch, the U.S. Embassy in Grosvenor Square in London.

Ali: What’s happening is the microphone is here and you’re speaking there. So just use that. No worries.

Morse: Does this work?

Ali: Yes.

Morse: Can everybody hear me?

Ali: Yes.

Morse: Does this work a little bit better?

Ali: Yes.

Morse: He designed the US Embassy in Grosvenor Square and-

Ali: Oh. Here?

Morse: Yes. Right here that they’re now turning into a Rosewood Hotel, the Chancery. So it’s going to be a fabulous building. Their basis is not cheap, but that’s the hotel investment business is “What is your basis?” Generally speaking, all hotels make money. The revenue is way above the costs. It’s a good business. It just depends on what your basis is.

Ali: Okay. Sorry. You were telling the TWA story, which is that we did our Skift Global Forum there in 2021, which is just a great hotel. If you want to be inspired about the history of travel, which we wanted to during COVID times, clearly, that’s the hotel to go to. So if you happen to have a layover or your flight is delayed at JFK, just take the air train. It goes right to his hotel, and you can walk in and have food there, whatever else you want.

Morse: It’s a fun experience.

Ali: A fun experience. So let’s come back to the… So what you’ve done with MCR is you not only have these hotels, but you are a buyer of hotel tech. So you bought StayNTouch. You bought Optii. You have also, you said, investing in hotel tech, not a venture capital, but a minority investor. So what’s thesis behind buying hotel tech for a hotel owner-operator?

Morse: So as a hotel operator, we use hotel technology and have used it for the last 20 years. And I describe hotel technology as a carrier pigeon and a stone tablet having mated. It is brutal. It is simply awful, as evidenced by… So when I built the TWA Hotel, I had to source 65 different software systems, and then I had to stitch them all together. And none of the vendors care what the owner wants. They just want to sell you more software. And they tell you that their software [inaudible]-

Ali: Except for our sponsors. I’ll just [inaudible] our sponsors. They’re the best.

Morse: Who’s the innocent here?

Ali: Who are our sponsors?

Morse: Google. Google’s not going anywhere, nor are they going to be offended. Google’s a great product. So we’ve been investing a lot in making hotel technology better. And we have the history and the knowledge and the day-to-day execution to make the products better. So we’ve bought two hotel technology companies, StayNTouch and Optii. We’ve made six investments so far. We have a pipeline of another four or five behind this.

Ali: This is they’re showing Optii dashboard, I guess.

Morse: And I’ll give you an example. This is Optii. But with StayNTouch, the hotel property management system, we use in our company about 16 different hotel PMSs, and everything from Opera to Infor to Springer-Miller, Jonas Chorum Fosse, FS-PMS, Reserve. I mean, you name it, we use it. And StayNTouch was the best product that we used. We were just a customer because StayNTouch thinks of the world as 24 units of inventory per day instead of one unit of inventory per day. In the United States, you can’t get a hotel PMS that thinks of the world as anything other than one unit of inventory per day. So if you go on TWA’s website, we sell a lot of rooms-

Ali: By the hour or by [inaudible]-

Morse: We don’t like to use the term by the hour.

Ali: Okay. Sorry.

Morse: This is the second-oldest business in the world, and we don’t like to use hourly jokes.

Ali: But [inaudible]-

Morse: But we do sell day stays. We call it a day tripper from the Beatles song, from 8:00 AM to 1:00 PM. You just need to take a nap, have a workout, get a sandwich before you drive into the city for a meeting. JFK is the landing destination of most of the red-eyes coming out of LA and San Francisco. And so people land at 5:00 in the morning. They take a nap, they have a workout, then they drive into the city and still make their meeting at a reasonable time. Airport hotels work.

Ali: Yeah. You are a fan of airport. You just bought the-

Morse: Love airport hotels.

Ali: … Miami Hilton as well. So what’s with the Airport hotels?

Morse: Miami, Blue Lagoon, Hilton Hotel.

Ali: How can we reinvent airport hotels?

Morse: Well, I think that TWA, we made a valiant effort at trying to reinvent it. And we were trying to make the product a part of the trip. Normally the airport is a means to an end. It’s a lousy place that you slog through in order to get to where you’re going. What if you could actually have fun at the airport? I mean, this is a whole novel concept. So that’s what we tried to do.

Ali: At least in a U.S. airport [inaudible]-

Morse: We have an infinity edge pool. We’re tied for the number-one plane-spotting location in the United States, it’s us and the In-N-Out Burger at LAX that are vying head-to-head for the guys with the long lens cameras. They come out for five hours and they just watch planes take off and land all day. We have an ice skating rink, a roller skating rink, a miniature golf course. We launch curling this year. We have the national [inaudible]-

Ali: Pickleball? Pickleball is not coming?

Morse: No. We did pickleball.

Ali: You did pickleball.

Morse: We did pickleball. We did that on the ice skating rink or on the roller skating rink last summer. We launched the National Jenga Tournament, which is a-

Ali: You bought the rights to… So you were telling me some story. You bought the rights to the-

Morse: The National Blocking Association, also known as the NBA, not to be confused with a different NBA.

Ali: And theory behind that is?

Morse: People love Jenga. Why not host a fabulous Jenga tournament? So we had hundreds of players come out. We had a $10,000 cash prize for the winner of the National Jenga Tournament. And it’s a fun game. Families can play. Friend groups can play, you can drink while you play. It’s all about having fun. This is really in response to the poker craze and the chess craze, which lend themself to smart people. If you’re dumb, you’re not going to be very good at poker or chess. Right? That’s unfortunately discriminatory.

Ali: I’m not… I don’t [inaudible]-

Morse: That would not apply to you.

Ali: No. I don’t play any of the games.

Morse: Because of your just sheer, raw intelligence. I’m sure you’re a champion.

Ali: I’m not. No. Don’t.

Morse: But anybody can play Jenga. So we try to do lots of fun things at TWA.

Ali: So actually, let me ask you a question. You’re a very good storyteller. It’s very clear. I’ve known you for a while now. And you’ve brought that storytelling at your hotel, TWA. Can you bring that storytelling to, for instance, Residence Inn? Which by the way, tell why you love Residence Inn.

Morse: I love Residence Inn because it has the highest margins in the business and the highest return on invested capital. So-

Ali: Can you story tell through these hotels?

Morse: Very difficult. Very difficult. But Residence Inn is an amazing product. Customers love it. You get free breakfast, free dinner, free wifi. The corridors are short. The distance from your car to the guest room is very short. It’s a terrific product. You get your Marriott points and you save up all your Marriott points, and then you can redeem them at a Ritz-Carlton. So one of the most important factors of the lodging business that nobody ever talks about is about 60% of our customers are spending other people’s money. So everybody on stage here talks about the Google guy, talked about how you’re searching and all this kind of thing. If you’re spending other people’s money, you don’t really care how much it costs. Humans are vulnerable to an agency problem. If it’s not your money, that’s okay.

So a lot of our Residence Inn guests are on work trips. They’re traveling salespeople. They are plumbers. They’re electricians. They’re site supervisors. They’re doing local construction. It’s a lot of business travelers. And Marriott provides 65% from the central res system in terms of delivery. The second-best return on invested capital is Hampton Inn by Hilton. It’s an amazing product. Customers love it. They’re starting to come over to Europe more. In the US, 75% of hotel inventory is branded. And in Europe, it’s 25% and it’s moving upward quickly. Booking.com has essentially taken the place of the brands in Europe.

Ali: So let’s talk about your favorite topic, booking.com, your love for booking.com. Please explain your love for OTAs or lack of it.

Morse: It’s not a love-hate or frienemy type of relationship. I do sometimes get tired of the hotel business being the doormat and the red-headed stepchild of the entire travel space. It’s where when everybody goes to extract value, nobody takes it from the airline oligopoly. They take it from the hotels. So as evidenced by about 20 years ago, two folks came along and they swiped $200 billion of value from the hotel industry. And those people’s names were Expedia and booking.com. And the hotel business did not miss a trick. This is a testament to how good the hotel business is.

And then about eight years ago, another guy came along and swiped $100 billion from the hotel business. His name was Brian Chesky. And the hotel business keeps on ticking and Airbnb is doing terrific. And there was a lot of panic in the 15 to 17 to 18 range. Said, “Oh. Hotels are going to get eviscerated by Airbnb.” We’ve all managed to coexist. Hotels keep growing. Airbnb keeps growing. It’s because of the latent demand for travel, which is largely driven by the ultra-low-cost carriers. EasyJet and Ryanair in Europe. In the US, SouthWest Airlines, JetBlue, ValueJet, all those kind of things. You can now fly from New York to Florida for 39 bucks. And it’s a terrible experience, but what do you want for 39 bucks? I mean, Ryanair and EasyJet are the same thing. The Irish guy says this all the time, right?

Ali: Ryanair guy. Yeah.

Morse: If you want a better experience, fly British Airways. It’s more expensive, but you’ll have a better experience.

Ali: Well, I don’t know if that’s any better, but let’s leave it there. Are they a sponsor? Oh. Actually, they are. Shit. Okay. To IAG, we love you. I lost my thought there. OTAs. You’re obviously distributing your hotels through OTAs?

Morse: Well, if hotels have latent demand, you don’t need the OTAs. So TWA is not on the OTAs whatsoever. Never has been. The only way you can book TWA is by going to twahotel.com, period.

Ali: Not even on Google?

Morse: Nope. Zero. Because we’re an airport. We have latent demand, and we have a great product. And if you don’t like that, you can stay at one of the nearby hotels that are not nearly as nice, and you have to take two shuttle buses, one there and one back, and then you have to deal with the air train, and you have to navigate your way around Queens. So we’ve just taken some of our other Manhattan hotels off of the OTAs, and they’re more profitable than ever. After you carve out-

Ali: But that’s because it’s Manhattan, right?

Morse: It’s because it’s Manhattan. So that’s why I’m making the distinction of hotels with latent demand.

Ali: Latent demand. Okay.

Morse: We have a courtyard in Brownsville, Texas, which maybe I can take that off of the OTAs one of these days because of Elon Musk. Thank you to SpaceX for filling Brownsville. But otherwise, we’re happy to fly a Courtyard Flag in Brownsville, Texas. You’d never want to be independent or you need the central res delivery in secondary and tertiary markets. But in markets with latent demand, you don’t need to be on the OTAs. And I think what COVID has taught a lot of hotel operators is running 87% at a much higher ADR is more profitable than running 97% at a bottom feeder ADR and selling those last rooms and focusing on this perishable inventory aspect of hotels.

Ali: So we only have about three and a half minutes, and there’s so much to talk with you about. But AI, you told me a bunch of stuff off the record. Can you say it on the record about what you said about AI when I last met you about a month and a half, two months ago?

Morse: What did I say?

Ali: I can’t repeat it because it was off the record, so I can’t even tell you what it was. But tell me your view about obviously that this is the age of AI or at least the coming age of AI.

Morse: Well, I think artificial intelligence and machine learning are-

Ali: From a labor perspective.

Morse: They don’t clean your room for you and they’re never going to. I think they’re going to decrease overhead staffing in hotels substantially. They might wipe out a lot of overhead jobs and ChatGPT could have a serious deletion effect on a lot of the manual processes that go on in hotels. But every single sales presentation that I see pitches us on, “Oh. This product has machine learning and this product has artificial intelligence.” We clean rooms for a living. We make beds for a living. Artificial intelligence does not make beds. It does not make breakfast. It doesn’t make lunch. It doesn’t make you a drink in the afternoon. And it certainly doesn’t make your life any more fun. It might make it marginally more efficient, but we’re in the people business and we’re in the experience business, and we clean rooms for a living. We have a lot of labor. We have 10,000 employees, and artificial intelligence is not going to eliminate most of those jobs. But it may eliminate a lot of the corporate jobs, people who are putting PowerPoint presentations together for their living.

Ali: And you love PowerPoints. I know that, for sure. No. I’m kidding. What’s the most fun technology? What’s the most exciting technology for you today?

Morse: Well, the greatest technology in the hotel business right now, the greatest innovation in the hotel business, is fake grass.

Ali: Is what?

Morse: Fake grass. Artificial turf. Fake grass. The technology in fake grass now is spectacular. And it is better for the environment because you don’t have to water it. You don’t have to pay to put in sprinklers that are always broken. It magically wipes away the dog poop that’s out in front of your hotel. It’s terrific. We’re putting fake plants and fake grass everywhere. It looks better than the real stuff. And then in the wintertime, when you have the dead grass in the snowy environments, or God forbid in Texas and that kind of thing, it’s green all year round. So this is an innovation that doesn’t get enough airtime.

Ali: I don’t know how to… That was-

Morse: I threw you off on that one. You weren’t ready for that one.

Ali: You threw me off. You threw me off. It’s a hard one. You were supposed to start with saying nice words about Skift. Please do it at the end of it.

Morse: The Skift folks are great. I love what Skift does. I was actually telling Rafat earlier, honestly, I go to all the hotel conferences and Alice and NYU and the Phoenix conference and the Berlin conference and all these kind of things. People actually learn things at the Skift conference. They attend the sessions and they get information and knowledge out of them. All of the rest of them are just networking opportunities for people to get together, drink a few cocktails, build relationships. Not that there’s not value to that. But I tip my hat to Skift because people actually attend, sit, listen, and the speakers do a great job. Rafat and his team do a great job.

Ali: And you’re a huge fan of Daily Lodging Report, Alan.

Morse: I love the Daily Lodging Report. I’ve read every single word of the Daily Lodging Report for the past 15 years, every single day. I can’t stand it when Alan takes a holiday.

Ali: Oh, my goodness.

Morse: I feel uninformed.

Ali: He’s going to give me such a hard time for that. All right. Thank you. Thank you, Tyler. This is so great. I appreciate it. Thank you.

Morse: Thanks, Rafat. Great seeing you.

Photo Credit: Tyler Morse is the chairman and CEO of MCR. He spoke at Skift’s Future of Lodging Conference in London on March 29, 2023. Source: Skift.

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