nightly business report - monday may 27 2013

7/30/2019 Nightly Business Report - Monday May 27 2013

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ANNOUNCER: This is NIGHTLY BUSINESS REPORT with Tyler Mathisen and

Susie Gharib, brought to you by --

(COMMERCIAL AD)

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Good evening,

everyone, and welcome to a special holiday edition of NIGHTLY BUSINESS

REPORT.


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Today, of course, is Memorial Day, the unofficial kick-off to summer.

And it`s a time when all of our thoughts turn to warmer weather and beaches

and barbecues and relaxing and reenergizing.

SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: And, you know, Tyler,

whether it`s traveling to that dream destination or buying that vacation

home you`ve always wanted, summer is a time of spending. And with that

spending comes economic implications, most importantly on your wallet.

So, we`re going to break down everything from the summer home economy

to what Hollywood has in store for you, as we look at the big business of

summer.

MATHISEN: And it is a big business, of course. It looks like more

people will be taking vacations this year. And depending which survey you

read, it looks like one in four Americans plan to spend more on travel this

summer. But regardless of whether you`re driving or flying or going far

away or staying closer to home, there will be a cost.

Phil LeBeau tells us what to expect.

(BEGIN VIDEOTAPE)

PHIL LEBEAU, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over):The


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summer vacation is back on the calendar. Need proof? Stop at this Terry s

RV shop in Frankfort, Illinois, and, Mike Stamp if he has an RV for rent

this summer.

MIKE STAMP, TERRY`S RV: Well, we`re about 20 percent ahead of what we

were this time last year. I think people are beginning to feel a little

more at ease about the direction the economy is going and they`re planning

their vacations.

LEBEAU: The online travel firm TripAdvisor says summer vacations will

be up 7 percent this year, majority of them driving. With the economy

improving and gas prices for most of the country still well below $4 a

gallon, Mike Stamp says people are taking longer trips.

STAMP: I`m getting more trips to where people are going to Florida,

out West. You know, they want to see the Grand Canyon or Mount Rushmore or

Yellowstone Park, versus just going up to the dells or something like that.

LEBEAU: If you`re flying this summer, expect packed planes. Trade

group Airlines for America expects 209 million people to fly this summer,

most since 2008, with a record 27 million flying internationally.

COURTNEY SCOTT, TRAVELOCITY SENIOR EDITOR: Domestic air fare is down

2 percent. International is flat year-over-year. And that will put you at

$384 for an average domestic air fare and $985 for an average international


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air fare this summer.

LEBEAU: With air traffic control towers back to full staffing, the

delays that crippled airlines in late April have gone away. What hasn`t

changed are add-on fees like paying for soft drinks on Frontier and Spirit

Airlines. And even though people flying in the U.S. last year paid a

record $3.6 billion in baggage fees, a new survey says flyers are getting

used to paying to check a suitcase.

STUART GRIEF, J.D. POWER: Consumers as much as we dislike these fees

are becoming more and more accepting of them. We see that in the

reasonableness of the fees. Thirty-seven percent of passengers now say

that they consider bag fees to be reasonable.

LEBEAU (on camera): With new and more costly fees going into effect,

flying this summer is likely to be more expensive. But experts say, if you

book early, finding the right flight at the right price for that family

vacation, it`s still a possibility.

Phil LeBeau, NIGHTLY BUSINESS REPORT, Chicago.

(END VIDEOTAPE)

GHARIB: Not many of those travelers will stay in hotels. Others will

cruise to exotic ports of call. But questions linger, is there strong


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demand this summer for rooms and what if any fallout is there from the

recent ship debacles on the seas.

Simon Hobbs has a look at expectations for the hotel and the cruise

industries.

(BEGIN VIDEOTAPE)

SIMON HOBBS, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over):This

summer demand for hotel rooms will almost climb back to records set in 2007

before the last recession, according to data being collected from across

the nation.

JAN FRIETAG, STR: We`re selling 2 percent more rooms this summer than

we did last summer and then that lifts the occupancy up to an average

occupancy of around 70 percent.

HOBBS (on camera): The big question now, this summer, is whether

hotel owners can significantly raise what they charge for rooms without

significantly losing bookings.

(voice-over): Sunstone Hotel Investors (NYSE:SHO) just paid $250

million for the Boston Plaza. Its CEO is telling the brands he pays to run

its 26 big hotels, Marriott, Hilton and Hyatt, to get more ambitious in

raising nightly room rates.


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KEN CURSE, SUNSTONE HOTEL INVESTORS CEO: We`re about 7 percent off

prior peak for hotel prices and we`re encouraging our operators to continue

to be aggressive on driving prices so that we can -- we can meet the demand

with higher rates.

HOBBS: The recovering property market will also allow big names that

want to get more asset light to sell hotels this summer that they don`t

want, to the delight of shareholders.

JOE SIMKINS: We`re pretty bullish on lodging right now. Our top

pick, Starwood Hotels, we think the company is going to return in capital.

They have $3 billion of assets they`re going to sell in the next couple of

years. We think that goes back to shareholders.

HOBBS: At sea, for cruise operators, it`s all about pricing.

Carnival`s high-profile string of problems at sea resulted in its now

second profit warning in two months because Carnival (NYSE:CCL) is slashing

prices to persuade people to fill its ships.

UNIDENTIFIED FEMALE: Carnival (NYSE:CCL) makes me not want to go.

But it`s always other ones I guess, I can`t speak for the others because I

haven`t heard bad reports about the other cruises.

UNIDENTIFIED FEMALE: Since things have been confined to that one


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me.

MATHISEN: You heard Simon`s report there. How are your bookings

running for this summer compared with last year and how do your prices

compare with a year ago?

ARORA: Yes. I mean, as Simon pointed out, our booking pace is 12

percent higher than last year. So, what it allows us to do because

bookings are coming in advance, you know, recently up through the recession

period, the booking pattern was so much delayed, whereas today it`s picked

up. So, therefore, it allows us to actually look at the average room rate

and tweak the average room rate and get the best out of the daily rate and

occupancies.

GHARIB: So, how much can you tweak those rates? Because consumers

are still very, very price conscious.

ARORA: Yes.

GHARIB: And just listening to that report, there could be sticker

shock.

ARORA: Yes, I think what we tried to do is rather than raise the

prices exponentially, it`s basically meeting the demands and, of course,

the demands are higher. And, therefore, you know the turn away of our


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bookings is higher. What we have to do in order to allow the people, allow

the clients to stay with us, we need to keep the rates in our rearview

mirror.

So, we don`t -- we only tweak them or incrementally raise them to get

the clients in and offer value.

GHARIB: It`s rare that we get a chance to talk to a top hotelier and

I`ve always wanted to know what does a guy like you, when you check into a

hotel or you walk into a hotel room, and you get your first impressions,

what is it that has to be right, or by converse, what can be wrong, that

would really tick you off. What is it that set you off?

ARORA: Well, I think it starts -- Tyler, it starts before you get

into the room. It`s a whole arrival experience.

And I found that, myself included and the clients, if the arrival

experience is not perfect, then the rest of the stay normally goes on a

downward spiral. But when you do get into the room, you obviously want to

feel clean and the room must have -- you know, the furniture must not have

its knicks, if you well. It needs to be beautifully decorated and styled

but style is one thing, service is obviously the most important thing.

So, you want everything to happen within minutes when you first

arrive, because you don`t want to be disturbed.


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So, we really -- as a hotelier, you focus on the secret of service so

that client is not disturbed too much.

GHARIB: That`s fascinating, Radha.

Tell us, you travel all around the world. You`ve got properties all

around the world. Where are the best deals -- whether it`s hotels or

restaurants or shopping, you know, what`s hot right now?

ARORA: The hot, certainly, has been Mexico and has been for a

considerable length of time actually. When I say considerable length of

time -- for at least the last 15 months or so. I love to go to Mexico.

It`s nearby.

From the West Coast, it`s three or four hours away as it is from the

East Coast, depending on where you go in Mexico, of course. You get great

deals in Mexico. The air lift is much better. It`s easier to get to.

And, you know, of course we have three hotels, Rosewood Hotels, in

Mexico. So, obviously, you know, I likely to go and visit my properties.

But in general, I love to go there because as I said it`s nearby, the

weather is very predictable -- pleasantly so. And you can get -- and you

can get still get amazing deals in Mexico.


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MATHISEN: Since you didn`t ask, I`m going to tell you what ticks me

off when I go to the hotel that`s when the key card doesn`t work when I

check in. That`s one thing that better be right, or I get carry on it.

ARORA: Yes.

MATHISEN: What is the one thing that hotels fall down on and could

fix very easily? What is the thing that you see most often that would be

an easy fix to make the experience better?

ARORA: Well, I think in general what you find, and, again, this is

where we differentiate ourselves in Rosewood, is that mostly hotels go

through a process. So, they create this standard operating procedure, and

service standards. So, from the arrival experience through departure

experience, through to the fact that when you stay in the hotel, you are

constantly asking for things or requesting things.

And often what I found is that the employees tend to kind of walk you

through the process or go through the process, despite the fact that you

may not be enjoying your stay, they still might say, you know, calling room

service and they don`t have the items you want to order and they go through

the process and they say, of course, we don`t have that particular item but

is there anything else I can do for you?


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So, they go through the process really thinking through all the hints

that the client is dropping and I feel that more and more so the employee,

the staff needs to be engaged with the client.

MATHISEN: All right. Radha, thank you very much. Have a great

summer.

ARORA: Yes, thank you. Thanks for --

MATHISEN: Radha Arora, president of Rosewood Hotels and Resorts.

GHARIB: And coming up on the program, the summer home economy -- how

this season is shaping up for vacation homes.

(MUSIC)

MATHISEN: If you had your eye on the vacation home, but you haven`t

bought it yet, you`re probably out of luck for this season, and you`re

likely have to rent. But don`t give up hope. Diana Olick surveyed the

East Coast to get the lay of the land for both sales and rental this

summer.

(BEGIN VIDEOTAPE)

DIANA OLICK, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over):The


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business of summer has already begun here in Saint Michaels on Maryland`s

eastern shore for Memorial Day weekend the big rentals are all booked. But

an interesting dynamic is playing out for the rest of the summer as the

overall home buying market recovers.

DEBBIE LIPSCOMB, EASTERN SHORE VACATION RENTALS: We`re getting the

calls again for people looking to really buy and buy into the market and

start renting again.

OLICK: Slower sales over the past several years have kept the rental

market tight with big rentals like this one in high demand. Now, not only

are buyers returning new renters are coming into this quaint Maryland

village from the Jersey shore where Sandy took its toll.

LIPSCOMB: We hear that conversation we always go to Avalon, where we

always go somewhere on the Jersey shore and we`re nervous about that.

OLICK: But further down the East Coast, on Hilton Head Island in

South Carolina --

JAMES WEDGEWORTH, REALTOR: It`s great time to buy, best time to sell

is what I tell people.

OLICK: Realtor James Wedgeworth is just glad home prices have stopped

falling. They`re not rising yet. Rentals are strong. But his selling


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season won`t start until mid-June. He is cautiously optimistic.

WEDGEWORTH: So what people do is they come here on vacation, have a

great time, most beautiful place they`ve ever seen. Let`s pick up a place

here.

OLICK: And up north, buyers are already picking up places and have

been since winter. The Hamptons are back if not better than ever.

LAURA NIGRO, HAMPTONS REALTOR: The Hamptons is unlike any other

market. We`re very much in a bubble here.

OLICK: Rentals for the larger more expensive homes are booked. Sales

are also growing more competitive, especially in the Hampton sweet spot.

NIGRO: We`ve seen bidding wars in $4 million to $5 million range as

well, as though all the market.

OLICK (on camera): The threat of rising mortgage rates is also

bringing more vacation home buyers back to the market eager to take

advantage of those rock bottom rates while they still can. Vacation home

sales were up 10 percent last year, according to the realtors, but with

added confidence now, this year might just beat that.

For NIGHTLY BUSINESS REPORT, I`m Diana Olick in Saint Michaels,


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Maryland.

(END VIDEOTAPE)

GHARIB: And once you land that vacation home or even if you`re saying

at your own home, you`ll likely be grilling at some point.

Joining us now is acclaimed chef and restaurateur, Michael Lomonaco.

He has cooked at places like Le Cirque, 21 Club, Windows on the World, and

now, he`s serving up sizzling dishes at Porter House in New York City.

And welcome to the show.

MICHAEL LOMONACO, CHEF AND RESTAURATEUR: Thank you.

GHARIB: I want to ask you, Michael. You know, one thing that all of

us look forward in the summer is to have some friends over for a barbecue,

throwing some steaks on the grill.

But looking at the price for beef and even chicken, do you think a lot

of people just won`t spend the money, won`t splurge like that?

LOMONACO: Well, I think people will continue to want to have a great

time. So I think it s good shopping and good buying that makes it happen.

You know, there`s so many shopping clubs that people take advantage of that


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and use their freezer to store the sale items for parties and events.

But also, one of the things I always recommend is that there are great

buys to be had in other cuts of beef such as, you know, a good chuck steak

which is great on the grill if you don`t overcook it or other cuts like a

skirt steak or hanger steaks, you see once in a while. But it`s -- there

are so many different other cuts of beef that aren`t -- you know, it`s not

the rib steak or strip steak but they`re equally as satisfying and

delicious. I think that`s helping people kind of manage their budget.

MATHISEN: People are grilling all kind of different things, Michael,

these days. Not the family pet, obviously, but they are grilling

vegetables. And my wife was telling me about grilled watermelon, said it

was great.

Talk me a little bit about the odd things that really go well on the

grill.

LOMONACO: Well, you know, this is one of the amazing things, is

because the outdoor grill has become, I think, the center of home cooking

experimentation and creativity. It`s fun, it s fast, it s easy and it`s

very delicious kind of food that comes off the grill, so you can put

produce, you can grill greens like romaine lettuce and things like that.

People are doing that. They are grilling fruit. They`re making


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grilled desserts. They come off the grill, flat breads. They are making

pizzas on the grill.

And also, with so many grills that have sort of cooking -- you know,

they are so large you can bring pots and pans out there and make a paella

on the grill, where you can do yes, you get some of the smoking flavors.

MATHISEN: All right. I got to ask you, because this is a debate in

our house -- gas grill or the old-fashioned charcoal? Which makes the food

taste better?

LOMONACO: Well, I`m a real lover. Listen, you know, gas grills are

fast and easy. You know, they warm up quickly. But I`m a real lover of

charcoal -- of hardwood charcoal. Not even briquettes. I mean, I really

love the hardwood charcoal.

They can really burn -- they give you a really hot fire which I love

for steaks which I`m a steak guy. So, that`s something that really matters

to me. They give you a hot fire but they also have some of that smoke.

That`s what people really want in their foods.

So, you know what? If you have the room, have both.

(LAUGHTER)


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MATHISEN: If you go to New York and you`re a steak guy, go to Porter

House. It`s a wonderful restaurant, Michael.

LOMONACO: Thank you.

MATHISEN: So, what is the critical utensil that I taught have if I

fancy myself as a real grilling aficionado, apart from the grill?

LOMONACO: Well, you know, really, I guess there are a couple of basic

things. I`ll tell you, the most important thing is keep your grill clean.

So, you do need a brush. You do need to ever clean your grill.

But I`m, you know, I`m a lover of tongs. You know, I never use a

fork. I never turn anything with a fork. A fork always pierced.

You know, good heavy tongs. So, you have to kind of look for those,

the kind that we use in restaurants or very simple utilitarian, but they

are heavy and good size tong. So, you don`t -- I mean, that`s great for

turning all kinds of food because it`s really about managing the grill, you

know, moving food around is the best way to cook food. Not moving it too

often. You know, you have to let it cook but tongs.

That`s -- one other thing, a thermometer. Check the temperature.

GHARIB: That`s good advice. That`s really good advice.


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MATHISEN: Put a thermometer under your tong. OK.

GHARIB: So much fun talking with you. Thank you so much. Chief

Michael Lomonaco.

LOMONACO: Thank you. Thanks for having me.

GHARIB: Tyler?

MATHISEN: Who knew about tongs? I love that.

All right. Coming up, the entertainment industry is vying for your

dollar this summer.

(MUSIC)

GHARIB: One industry that puts its stamp on summer like no other,

Hollywood. The blockbuster season is off to a strong start, with a full

slate of movies still to come. Some experts believe the summer box office

record of nearly $4.5 billion set just two years ago is well within reach.

Julia Boorstin takes a look at the marquee names, the studios,

theaters and sounds (ph) hopefully make this summer a summer to remember.


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(BEGIN VIDEOTAPE)

JULIA BOORSTIN, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over):

Marvel "Ironman 3" sets the summer movie season off to a superhero-size

start. In just two and a half week, it grossed $1.1 billion, more than

two-thirds of that coming from overseas.

And "Star Trek Into Darkness" opened last weekend with $85 million in

the U.S., and nearly as much from the rest of the world. This summer, more

than ever, the global box office is a game changer.

ERIC HANDLER, MKM PARTNERS: What you`re seeing from "Ironman", `The

Great Gatsby" and "Star Trek" is the international markets is what`s

driving the bigger successes.

BOORSTIN: Despite the fact that the movie industry faces so much

competition from everything from television to video games, as these big

budget spectacles that can draw movie fans to come out every weekend.

UNIDENTIFIED FEMALE: I`m more excited for "Man of Steel."

UNIDENTIFIED MALE: "Star Trek" obviously.

UNIDENTIFIED FEMALE: `Lone Ranger", that one looks really cool.


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UNIDENTIFIED MALE: We go every week. We`re here every week.

UNIDENTIFIED FEMALE: If they are good films, I`ll go see them.

BOORSTIN (on camera): So many big budget films opening in such a

short period of time raised questions about whether they`ll cannibalize

each other. But analysts say they`re timed, so there isn t too much

overlap between directly competing films. And the summer box office is on

track to make gains over last year.

(voice-over): A slew of summer sequels continue with Memorial Day

weekend with Warner Brothers` "The Hangover Part III" and Universal`s "Fast

and Furious 6". And well-known brands should continue to dominate

throughout the summer.

Warner Brothers Superman reboot "Man of Steel" hits theaters in June

and Disney`s "The Lone Ranger" in July.

So who is cashing in from the upward trend? Disney (NYSE:DIS) is

well-positioned following "Ironman 3`s" big open, with two pics that are

animated films, "Monsters University" and the "Cars" spinoff, "Planes",

plus, "The Lone Ranger".

And Warner Brothers has a total of six films debuting between now and

Labor Day.


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Theater chains should only cash in, from crowds coming to buy tickets

and popcorn.

CHARACTER: Thanks for celebration.

BOORSTIN: For NIGHTLY BUSINESS REPORT, I m Julie Boorstin in Los

Angeles.

(END VIDEOTAPE)

MATHISEN: And, finally, if the movies aren`t enough for you and you

want even more excitement, theme parks just might be up your alley. With

an economy slowly on the mend, theme parks have had a resurgence of late.

But as Jackie DeAngelis tells us, the companies that own the parks aren`t

taking that for granted.

(BEGIN VIDEOTAPE)

JACKIE DEANGELIS, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over):

Nothing says summer like a roller coaster. And theme park companies want

to get you and your family on that roller coaster as often as possible.

How are they doing it? With newer and more spectacular attractions.


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Universal (NYSE:UVV) Studios in Florida is adding the Transformer`s 3D

Ride. It`s already been a hit in parks in California and Singapore.

Six Flags is adding three record-breaking thrill rides and combining

its Safari attraction into the theme park at great adventure in Jackson,

New Jersey.

Hershey Park in Pennsylvania has added more attractions in its water

park. And at Disney (NYSE:DIS) in Orlando, new fantasy land attractions

that opened late last year will be on many visitors` to-do list.

Meantime, Sea World in Orlando is hoping a completely new penguin

exhibit will bring the crowds in.

(on camera): At theme park is not just about getting people in their

door, but it`s getting them to spend while they`re here, on games, on food

and souvenirs.

At Six Flags park, like this one, the average extra spend is $20.

JAMES REID-ANDERSON, SIX FLAGS CHAIRMAN, PRESIDENT & CEO: If you

get

spending to increase on a per capita basis and total nicely, and we`ve seen

those increases come across every aspect in parks. So, our spending is not

exactly, but close to 50 percent on tickets and 50 percent in parks, and

that in park spending has been growing.


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DEANGELIS: But the theme park business has its risks. The economy,

the weather and even disease outbreaks impact whether people will flock to

the parks.

And with gas prices on the rise ahead of the summer driving season,

analysts say that consumers tightening spending could be an issue. Many

parks try to mitigate risk by selling season passes by offering unlimited

access sometimes for a slightly higher price than a day pass. Parks can

book revenues early.

UNIDENTIFIED MALE: I think it s a great idea, to get in for one day.

So, I can go 80 and come whenever I want.

DEANGELIS: And that`s one advantage that regional parks have, being a

local destination for consumers makes them more attractive while some of

the destination parks like Universal (NYSE:UVV), Disney (NYSE:DIS),

SeaWorld, they require air travel and hotel for most to visit.

Still, analysts feel each park has a unique flare that draws people

in.

IAN ZAFFIND, OPPENHEIMER EQUITY ANALYST: So, Six Flags is going to be

in the larger market and really attract the regional customer. (INAUDIBLE)

has also really done a good job of segmented the marketing going after the


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regional as well.

Disney (NYSE:DIS) is much more of a destination. They`ve had a very

good opportunity to really expand their brand. So they have their

characters at the parks.

And then Sea World just became public but they have live animals, so

it`s sort of a different type of market.

They know, I don`t really view them as going head-to-head per se like

two prize fighters. I would say more that they segmented the market in

doing more, you know, dividing and conquering.

DEANGELIS: And in some case, location doesn`t matter. School groups

making touring trips with multiple stops take a break for fun at Six Flags.

UNIDENTIFIED MALE: It is a middle school trip eighth grade. Just to

let them have fun. They went to D.C. and saw the monuments. And now,

today, to let loose and enjoy themselves for the last day of the trip.

DEANGELIS: But no matter how you slice it, theme parks are big

business. Analysts expecting 315 million people t visit theme parks this

year, generating more than $11.5 billion in revenue.

For NIGHTLY BUSINESS REPORT, I`m Jackie DeAngelis.


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(END VIDEOTAPE)

MATHISEN: And before we go, it is great, of course, to celebrate

Memorial Day. But it`s also great to remember why we have a memorial day

and that`s because of all the men and women in our services who gave their

lives for our country.

And that will end our special edition of NIGHTLY BUSINESS REPORT, the

business of summer. I`m Tyler Mathisen. Thanks for watching.

GHARIB: And I m Susie Gharib. Have a great evening everyone. Tyler

and I will be right back here. See you tomorrow.

END

Nightly Business Report transcripts and video are available on-line post

broadcast at http://nbr.com. The program is transcribed by CQRC

Transcriptions, LLC. Updates may be posted at a later date. The views of

our guests and commentators are their own and do not necessarily represent

the views of Nightly Business Report, or CNBC, Inc. Information presented

on Nightly Business Report is not and should not be considered as

investment advice. (c) 2013 CNBC, Inc.


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nightly business report - monday may 27 2013

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