I must have too much time on my hands because lately I have developed some macro themes as to what some of the next big things are that are going to assail us due to all the goings on. As much as I would like to blame everything on Donald Trump, I think that is becoming trite because while he is an empowering agent for much of the change which we are experiencing here and on the world stage, I think its increasingly evident that this is a societal cycle that goes well beyond Trump. A few weeks ago as the L.A. wildfires dominated the press, I combined my experiences with homeowners insurance and what I was hearing coming off the rebuilding concerns as the fires raged and came up with a residential real estate valuation issue driven by various climate change factors, none more than the availability and cost of homeowners insurance. Some recent reports issued by respectable research hubs and published broadly made me feel very smart for a moment of two because they were echoing exactly what I was saying.
I now have a new kick that was occasioned by our friend Phillip’s visit the other day. Phillip is a senior corporate sales management professional for one of the large hotel complexes. He tends to focus on the high-end product all across the globe and has worked at various times for all the big luxury hospitality chains. Phillip is in the thick of corporate life, so he was just coming of a national sales meeting of his team, listening to all their gripes, and the morning he was leaving, he had a conference call with other professionals on the topic of starting the planning process for the swales goals for the rest of the year. This sounds like a version of something I did over and over again in whatever business I was running because projecting the future is a big part of managing the process, expectations and the team. But in the context of hospitality management, there are specific environmental factors at play that need to be considered. I imagine that this is even more the case now that technology and the recent COVID experience have made remote work so much more prevalent, notwithstanding the push to turn the clock back on the phenomenon. What needs to be a very real concern based on the experience of 2020 – 2022 has to be the things that can literally shut down travel at the drop of a hat.
Back during my one year in business school (1975-76), I had a part time job as a Teaching Assistant for the Economics professor in the Hotel School. That meant that I had to spend time translating economic theory into hospitality terms and cases. It was an interesting process and one that was not so very hard if you had a good grasp on economics. I had majored in Economics and Government as an undergraduate and was concentrating on Finance in business school, so I was pretty well-versed in economics by that time. Also, during my career, at various times, I had to deal with the hotel industry for this and that reason. In the 80’s when I took over all the Emerging Market sovereign debt (our bank had $4B, mostly in Latin America), we spent a lot of time trying to swap our debt for various equity assets including a number of Mexican hotels. Then, in my first post-Wall Street gig, I was working out a number of bad real estate investments, several of which had hotels and even more of which we tried to turn into hotels. That all put me in contact with a number of hotel consultants and forced me to walk through the hotel business process more than a few times. I think its fair that hospitality in one of the business lines, like retirement, asset management, insurance and venture capital that I feel particularly tuned into.
As Kim and I have focused on our retirement planning, we talk often about travel and our preferences about it. Neither of us are beach people and we are a bit beyond adventure travel. Our preferences run to going to interesting places where we haven’t been, but we are starting to short of those sorts of spots given how well-traveled we each are. We have both seen enough of Africa to feel little need to rush back with the possible exception to a place like Morocco. After this trip to Patagonia and around Cape Horn, we will have done enough of South America (that is especially so for me given that I’ve lived there for six years and traveled about everywhere on the continent). Given all of our trips to Mexico, Central America (I lived two years in Costa Rica) and Canada (I also lived two years in Canada), North America outside the U.S. has been done. We’ve been all over Europe from the Baltics to the Mediterranean and from Spain/Portugal all the way across to Turkey (I lived in Italy for three years). I have been all over the Middle East from Israel through the Gulf and down as far as Pakistan, skipping only the sketchiest spots like Afghanistan. Kim has done enough of it (mostly Israel and Jordan) to be satisfied given then difficulty for women in the region. We’ve done a lot of Australia and New Zealand. Our weakest continent is Asia, but even there we have done India in grand fashion, just did six countries of Southeast Asia and have spent enough time in Japan to satisfy us (I lived there for 2 months). While we have both been to Russia a few times, our biggest gap is the whole Central Asia area of the Stans and Mongolia. I’ve spent time in China and Korea, which Kim has not and that is perhaps her biggest remaining “bucket list” place.
I run through that litany to just make the point that compared to most other people of our age, we have mostly done our traveling and could be perfectly fulfilled if we needed to stop at this point for whatever reason. The reasons why people stop traveling are either financial, health-related constraints, perhaps waning or non-existent interest, or perhaps external restrictions.
That that brings me back to my current theme as expressed to Phillip. Based on the Trump Administration approach to trade policy, defense policy and extreme nationalism and isolationism, we have a trend of great change afoot in the geopolitical firmament. To paraphrase an old adage, as goes America, so goes the rest of the world, so this may be a global phenomenon in process. The first warning shots have already been fired. Canadians are being told to curtail their U.S. travel plans. Certainly Mexico/U.S. relations bode ill for north/south travel. We have already taken China off the list of travel spots. We also can no longer travel to Russia easily and the Middle East is more a no-fly zone than not (perhaps with the exception of Dubai). And now, on the issue of Ukraine, Europe is making serious plans to go its own way without the United States. Denmark is already on alert thanks to Trumps Greenland hunger.
It is my opinion that global travel is set to become far more restricted than it has been since COVID. While I’m sure Europeans will travel Europe and Americans will travel more in the U.S., cross-border travel may be heading into a twilight generation. As an investment thesis, I think shorting travel stocks might be important. As a travel planning exercise, I would suggest to take a short-term horizon and go where you want to go…now. And as for doing things like taking foreign assignments or even relocating overseas, I would suggest that these are the times when you do not want be be caught short without a clear nationality. So, I’m all about shorting travel every what I can.