Montage CEO: 'Tremendous Interest' in Luxury Products

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00:00How is business? We've been spending a lot of time on the road. Things are packed, things are crowded.

00:04It seems like the high-end is doing very, very well.

00:07It has. The luxury segment in general, we read it's up 3-4% over last year.

00:12We're actually up double that, about 8% over previous year.

00:16Tremendous interest in luxury products, especially ours.

00:20Who's your customer?

00:22It varies from property to property.

00:25At the resorts, it's people coming for leisure. We do high-end meetings as well.

00:30Global customers?

00:31Globally, yeah. More North America-based, but a fair amount of international travel as well.

00:37How much is business versus fun? Not that business isn't fun.

00:41It varies by season and time of year.

00:43In some of the properties, Hawaii, for example, it's almost all leisure.

00:47Other properties, we do much more on the meeting side of it.

00:52It can vary. It could be as much as 50% each.

00:55In other properties, it skews more on the individual traveler.

00:58Have you seen the demographic shift over the last year, basically, since President Trump took office for the second term?

01:05Somewhat of a crackdown on immigration, but we've seen, to a certain extent, international travel from Canada fall a little bit.

01:13Got some numbers here in New York, too.

01:16Is that affecting you at all?

01:17Well, not really. We've heard some actual stories here and there.

01:20A group may have been planning on coming in, but no.

01:23We really have not felt that, and when we look at it quantitatively, we're actually up,

01:27and we look at our group booking pace, which is the best leading indicator for the future.

01:31We're looking to next year right now, and we're ahead of previous years.

01:34All good indications, but we rely less on international travel than some of the other brands based on where our hotels are located.

01:43What about demographics in terms of age of the people who are coming to the resorts?

01:46Is it full of people in their 40s and 50s now?

01:49Yeah, we've always had an active clientele, and there's a youthfulness to that.

01:57But we also see a lot of multi-generational travel, the traditions.

02:01Grandparents bring in everybody.

02:02Grandparents bring in three generations.

02:04It's really great to see.

02:06I am curious, too, about just the administration, some of the policies, how it's maybe impacted labor costs, food costs, building costs,

02:14because these are things, certainly, that we talk about a lot when we look at some of the inflationary pressures that we've seen in our economy.

02:21Yeah, we read about it.

02:22Haven't really had the impact today in the operating costs yet.

02:26Even labor costs?

02:28And you're finding all the workers you want?

02:30Well, labor costs have gone up.

02:32That's been a challenge, market to market.

02:34Yeah.

02:35But that's been happening for the last few years.

02:39Right.

02:39So it continues.

02:41It hasn't gone away.

02:41It continues.

02:42It has not stopped.

02:43Does the pushback on immigration make it even more tricky?

02:47No.

02:48Fortunately, we've been able to attract the cream of the crop, it seems to be.

02:54But we keep an eye towards the challenge of finding great, great associates.

03:01I mean, it's the essence of who we are as a company.

03:04But in all parts of the resorts, I'm talking kitchen, housekeeping, still no issue with talent and labor there?

03:10It's market to market.

03:12Some markets, there's a real scarcity.

03:14Where is that scarce?

03:15Some of the seasonal resorts.

03:18So we rely on H-2B visas, J-1s to support, to bring in where we have to fill gaps.

03:26Seasonality is the biggest challenge.

03:28Will you still rely on those visas with the new restrictions coming into play?

03:31The restrictions that have been talked of late have been the H-1Bs.

03:35Yeah.

03:35We rely on H-2Bs.

03:36So I think we've been...

03:37So you'll be okay?

03:39It appears that way.

03:40And as we're gearing up for ski seasons, we have two great ski, three great ski resorts.

03:44We have Montage Deer Valley, the Pendrian Park City, and then Montage Big Sky.

03:49And we've been filling out our roster there beautifully.

03:53Well, it's interesting, too, because I feel like, you know, when there was a pushback by the administration against immigration,

03:58and then some of the construction and hospitality industries did reach out to the administration.

04:04So has it...

04:05Do you feel like you're being heard?

04:06Or go ahead.

04:07Well, there's a concern, obviously, as new development and what the cost will be associated with building the hotels.

04:14And we have 15 hotels today, but we have another 15 that are in various stages of development.

04:18So...

04:19And some of those costs haven't been...

04:22Are still being put together.

04:24So there's an eye toward that.

04:26But it's unpredictable, I think, is the biggest challenge right now.

04:29We don't know exactly where it's heading.

04:31We're talking with Alan Firstman.

04:32He's founder, chairman, and CEO of Montage International Luxury Hotels and Resorts.

04:36What are you guys building?

04:38Because you do hotels, you do resorts, you do residences, you've got golf courses,

04:43you've got clubs.

04:45Like, where's the growth for you guys?

04:47Well, we're seeing a lot of international growth.

04:49And so, for example, in Mexico, we've got four new projects in development.

04:54We're opening in Mexico City, a pendry next year.

04:57And then the year after, we've got both a Montage and a pendry opening in Punta Mita.

05:02What would you say to people about...

05:03Because Mexico City, as you know, can often be a target for concerns about safety.

05:08But what would you say, your experience?

05:10My experience has been terrific.

05:12We're developing in an area of town called Roma, which is a beautiful location, very European

05:18in feel, and a market that's been underserved in luxury hotels.

05:23And I think we'll do a great dining scene.

05:26It's going to be a great addition and an entry for us to further into Latin America.

05:32Tell us about a place that you've considered developing and you chose not to and why.

05:38Why did you pass on it?

05:41We pass on developing in markets where we don't think we can get the rate to support the levels

05:46of services we need to provide.

05:48And one of the biggest disconnects luxury hotel brands have, or if they put a hotel in

05:52a market that has a rate ceiling and no matter what they do, they can't get the rate, you

05:55have an inherent disconnect where either you're going to have an unhappy owner of the asset

05:59because you're not being able to get the returns you want, or you'll find those companies will

06:04reduce services commensurate with the rate they can charge.

06:06So I want to stay true to markets where I believe a luxury traveler will go.

06:12Is there a base rate in U.S. dollars that you have to have for a per night rate?

06:20I mean, I know it depends on where we are.

06:22It absolutely depends on where you are in the world, where you are in the country.

06:25I mean, broadly speaking, Montage runs-

06:27To make it work.

06:28Broadly speaking, Montage runs an average rate north of $1,200, $1,300 a night.

06:32So what we look at, we should be able to get $1,000-plus rate for a Montage, a little less

06:37on the Pendry, but we look at those, and then there's a factor based on the labor costs

06:43and others in a particular destination or market, but we factor that into where we think

06:49the hotel is today and where we think the market will be heading.

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