out and about…

…for the first time in months. My wife and I spent a few days in Arizona for the beginning of spring training and then in LA visiting two of our children. My impressions:

–tons of people are out to see baseball. From the dearth of the usual souvenir items, it looks like the teams weren’t expecting this large an influx

–the pitch clock is a big hit

–one of our favorite restaurants in Scottsdale has imposed a $20/person fee for reservation no-shows. Despite this, maybe 20% of the tables were empty when we got there. Inability to get staff. Prices were high everywhere except US Eggs. Portions seemed smaller (a relief for me), too.

–hotel rates were double their pre-pandemic level. The Hilton we stayed in had housekeeping services on request only. What makes this potentially interesting to me–we didn’t use the (free) service while we were there–is that hotels have a high degree of operating leverage. The rule of thumb I use is that cash breakeven is at 50% occupancy and financial reporting breakeven is at 60%. At 70%, the hotel is coining money. My back-of-the-envelope guess is that the reduction/elimination of housekeeping services for people staying more than one night could have the same positive effect on earnings as an extra 5 percentage points in occupancy. My experience is not by itself a reason to buy a hotel stock, but a possible source of positive earnings surprise. I have a small position in HLT. I’m not sure I’d recommend the stock to anyone else, but I’d be interested in any comments you might have about your own lodging experiences.

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