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Quest Means Business

Sheriff Briefs Press on Balloon Boy Aftermath; Bank of America Falls Short; Wi-Fi Takes Off

Aired October 16, 2009 - 14:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

RICHARD QUEST, CNN INTERNATIONAL ANCHOR: Hand over fist: How Bank of America let more than $2 billion slip through is fingers.

Eastern promise: Asia's star burns brighter, the sun goes down on the West.

And take off, log on: The flight of the future, it departs from a gate called cyberspace.

I'm Richard Quest, it might be a Friday, but that means I mean business.

Good evening. There is a big black hole in the books at Bank of America. The company performed even worse than analysts were expecting, and that made an impact on the market. We need to, of course, get into all aspects of that story tonight.

(RINGS BELL)

Let's bring you up to date with the Dow Jones. Down 74 points, back under 10,000 at 9,980, nearly 1 percent fall. The reason, of course, well, the market has gone over 10,000, it has fallen back. We've had disappointing earnings numbers, not just from Bank of America, with all basically across a raft of companies.

We've got, of course, the Q-25 that we're putting into context. Before we go to that, let's take you to Colorado where there is a press conference underway at the moment. It is the sheriff of Colorado, and he's taking about the balloon boy.

(JOINED IN PROGRESS)

SHERIFF JIM ALDERDEN, LARIMER COUNTY, COLORADO: ... were concerned and e-mailed us with a number of suggestions, and certainly we appreciate that.

I also can't let this go without expressing my appreciation to the numerous agencies that participated in this event yesterday. Clearly, the sheriff's office was involved, and all of our divisions, patrol, dispatch, our PIOs, victim advocates, search and rescue, posse. And in addition to that, I know we had Larimer County Parks, Poudre Fire Authority, Fort Collins Police. Colorado State University sent some people over to help, Poudre Fire Authority sent some people to help with the media.

The United States Forest Service. And certainly we're missing some, and I know we had National Guard and media helicopters and the Weld County Sheriff's Office and Adams County Sheriff's Office.

There were certainly a lot of people who put their heart and soul into this, and we want to express our gratitude to them.

The purpose of the press conference today is really to just try to answer everybody's questions at once. We have been inundated with phone calls and e-mails, nonstop, and, frankly, we need to somehow put an end to it so we can get about doing our business instead of answering all the media inquiries. So, hopefully we can resolve some of those issues today.

Really don't have any new information, or a lot of new information, but I do want to clarify a couple of things.

Obviously, yesterday, I spoke about us having conducted a very thorough search of the house. Obviously, it wasn't as thorough as we would have liked it to be, because the boy was in fact hiding in the attic in the garage.

I would like to explain that just so we can get it clear. I think we searched the house three times. Guys went into the crawlspace, they went into the attic, they looked every place, except the one place where the boy was hiding.

Apparently, there's some rafters in the garage, and part of it is covered, part of it's not, part of it's open. There's no ladders to get up into that attic portion. There's no stairs to get up there.

And frankly, looking at the debris in the garage, our personnel just didn't think it possible that a 6-year-old boy would be able to get up into that space, so they didn't look there. And of course that is the one spot where the boy was.

Also, I reported to the media yesterday that the boy was in a box in the attic. That was information that was relayed to me, but it turned out to be erroneous information. As we got the text message, or I got a page during the course of the news conference yesterday that the boy had been found, I turned and asked our investigators to contact somebody on scene and verify that. And by the time it went through a couple of levels and information got back to us, I now believe that what was reported was that the boy had crawled on a box and then used that box to get into the attic.

A miscommunication occurred, and I erroneously reported that the boy was in a box. There was not a box. There was a clear attic space that was flat.

So hopefully that clears that up.

There has been a lot of speculation, a lot of skepticism regarding this incident and whether it could have occurred as it was reported. We did in fact yesterday, during the course of this event, contact a professor at Colorado State University with expertise in determining the payload or the lift that a balloon of this dimension would support, and he informed us and reaffirmed that today, that a balloon of that size filled with helium would in fact handle a payload of about 80 pounds.

We believe that the young boy who was missing was about 37 pounds, so it certainly was conceivable at the time and remains conceivable today that the boy could have been in this device. I just want to say that because a lot of the speculation, a lot of the e- mails I have been getting have come from people reporting or suggesting that a balloon of that dimension would only be able to lift five to 15 pounds, so therefore the father had to be lying. And I just wanted to disprove that, at least based on the experts that we have talked to at Colorado State University.

There's -- you know, the question remains -- we were convinced yesterday -- let me back up a minute. We were convinced yesterday, after talking to the parents and having investigators on scene during the duration of this event, that the parents were being honest with us. They appropriately expressed statements, nonverbal communication, body language, and emotions during this event that were entirely consistent with the events that were taking place, believing that the boy was in the aircraft when it touched down and the boy was not found to be in there. There was a significant deflation, I understand, of their emotional state, which our people didn't think could be faked or was being faked.

And again, throughout the day, as the events occurred, all of their emotions and nonverbal communication was very consistent with what was taking place. And again, this was as observed by investigators on scene who have some expertise in this particular area.

You know, if any of you saw some of the media interviews or activities at the scene immediately after the boy came out, it's very evident that this boy is very hyperactive, to say the least, and, you know, the suggestion to us that perhaps this boy had been coached or coaxed by his parents to hide and remain still in this attic for five hours, during the duration of this event, just seems inconceivable. It seems much more likely that the boy was in fact frightened, because he somehow thought that he was responsible for this device becoming untethered and, therefore, decided to hide.

That seems like a very credible story. However, as you all also saw, there was an interview conducted last night, I believe by Wolf Blitzer on CNN, where asked why he did this, he, I believe responded, "We did it for the show," or something of that nature.

Clearly, that has raised everybody's level of skepticism again, and we feel it's incumbent upon us as an agency to go back to the family and attempt to re-interview them and establish whether this is in fact a hoax or if it's an actual event. We believe at this time that it's a real event. Certainly people are free to speculate, they're free to be skeptical about it. But those of us in the law enforcement profession have to operate on facts and what we can prove, and not what the public might think without any proof.

I think that's -- as many of the comments that I have. And I really haven't prepared anything, but I would be happy to take questions here.

QUESTION: Sir, what do you make of the fact that here's a storm chaser, he chases tornadoes, thinks nothing about going out and chasing tornadoes out in the field, and he wouldn't chase a balloon that had kids aboard? I mean, what do you make of that?

ALDERDEN: Again, I don't want to speculate about that, but our understanding is that he was trying to see where the balloon was going. He could see from where it took off, that it was headed toward Fort Collins- Loveland Airport. And we understand that he called the FAA believing that they would be able to track the flight of the device certainly better than law enforcement would be able to.

So, it does seem credible, especially considering the fact that this thing was just anticipated to rise and not come down any place near. And that if the boy was in fact in it, he wouldn't have any way to steer it or to operate any devices to lower it.

(CROSSTALK)

QUESTION: (OFF-MIKE)

ALDERDEN: We don't have any plans. We had hoped to do that today, but, quite frankly, after watching some of the media interviews this morning, the boy being sick, obviously the family suffering from a great deal of fatigue, we think it would be in the best interests of the investigation to not attempt to interview them today, but perhaps to do that tomorrow, after they have had a chance to settle down and get some rest. We just think for interview purposes, it would be much more productive to have them in that frame of mind than doing it when they're fatigued.

QUESTION: Sheriff, have you seen this home video that they made during the launch? Have you seen this tape yet?

ALDERDEN: No. I'm afraid I haven't. It's been described to me, but I have not seen it myself.

QUESTION: Would you like to?

ALDERDEN: I'm sure I will before the day is out.

QUESTION: Sheriff, the garage, the garage in which the boy was hiding, yesterday there was police tape around the house, there were investigators in the garage the entire time. The boy said to the press that he was sleeping up there half of the time that he was up there.

Looking into the garage, the garage was opened. Press was around. It was a very highly -- you know, a lot of commotion going on.

How likely is it that the boy could have been sleeping? I mean, with the stories that have been -- I mean, how likely -- do you still believe he was sleeping? And how will that play into your questions tomorrow when you interview the family?

ALDERDEN: Well, again, just -- let me maybe reverse it and saying, seeing how hyperactive this young lad was when he came out, how conceivable is it that he just sat up there quietly without being asleep or without being fearful to come out? I just can't see this particular boy being told, go sit up there for five hours and be quiet. I just don't see that happening as hyperactive as he is.

QUESTION: Sir, did the family call the media first, or did they actually call dispatch first?

ALDERDEN: My understanding is -- and I'm afraid I haven't seen a timeline, so I'll tell you what I believe to be the case today. Our understanding is that his first call was to the FAA, and that the second call was made to 9 News, with the belief that they had a helicopter that might be able to assist. And at some time afterwards, they called 911.

QUESTION: Do you find that odd?

ALDERDEN: I find it odd, but then as I reflected on it, of course, through the course of the evening, and knowing where he's coming from as a scientist and somebody who does some stuff with atmospheric things, the thought that the FAA would have some control over the air space over Fort Collins-Loveland Airport, where this thing was headed, that does seem credible. And certainly when somebody calls the sheriff's office and says, hey, we think we have a balloon with a 6-year-old in it that's out of control, really, what resources does the sheriff's office or the fire department or the police department have to deal with that?

So, in that aspect, I guess it seems credible to perhaps think, who's got a helicopter, or contacting the Federal Aviation Administration.

QUESTION: How do you think the kid got up into the rafters? How do you think he got up that high?

ALDERDEN: Actually, shortly after he came out and after the media arrived, he was in the process of climbing up there and showing the media how that occurred when he was just chinning himself up to the bar after climbing on some of the boxes when his dad called him back in. So, it did seem, from watching him, that he was just about prepared to swing into the attic.

QUESTION: How likely it is that the boys, not the parents, but how likely is it that the boys might have set this up amongst the three of them?

ALDERDEN: You know, you're talking about a 6, 8 and 10-year-old, and that does not seem very likely to me.

QUESTION: Sheriff, did he characterize this as a planned event, a planned launch? Or did he speculate that this was tethered and it somehow mysteriously drifted up?

ALDERDEN: Well, they were planning on doing an experiment and believed that it was tethered, or the intent was to have it tethered and allow it to rise 20 feet. And apparently, one of the ropes either broke or became loose, and that caused the other ropes to then become loose.

QUESTION: Because he had told you that they had planned some sort of liftoff that day.

ALDERDEN: They had planned to have a liftoff that day to bring it to 20 feet. That was the whole purpose of the experiment yesterday.

(CROSSTALK)

ALDERDEN: I'm sorry. If we could do one at a time, it would be much more productive.

QUESTION: (OFF-MIKE), and will they interview the children separately, or how will that work?

ALDERDEN: We're still in the course of putting that together. And of course we need to contact the family and see if they'll even consent to an interview.

Let me say this to maybe satisfy some concerns. When he came out yesterday, he immediately -- the family went nuts, hugging him, kissing him, yelling, crying. And immediately, our investigators asked for permission to take the boy upstairs and interview him, gave the parents the opportunity to be present, and they said no, fine, go ahead and do it.

So, our two investigators interviewed him outside of the presence of the parents. And I don't know at this stage in the game how productive it would be to pursue interviews with them, but we're certainly having that dialogue today.

QUESTION: Did he (ph) say anything about what the search efforts cost?

ALDERDEN: You know, we've had a lot of questions about the cost of the search effort and the number of personnel involved. And frankly, we don't have a handle on that yet.

We roughly came up with, just on the Larimer County side of the border, probably over 80 personnel involved. And, you know, 650 hours or some number like that. But, no, I don't have a cost figure. And frankly, determining what it cost at this point is the least of our worries.

QUESTION: Sheriff, you may be one of the few people, I think, on this planet that doesn't think this is a hoax at this point. I'm curious how much pressure you feel from the public right now to do something.

ALDERDEN: Well, certainly from the e-mails and the phone calls we have been getting, there's a lot of pressure to do something and to charge these people with committing a crime of false reporting, and to recover restitution. But that said, let me say again, as a law enforcement officer, a public safety official, we have to operate on what we can prove as a fact and not what people want to be done or what people speculate should be done.

QUESTION: Sheriff, there have been reports that the person who owns that field where the balloon landed actually suffered some damage on some wheat crops that had been planted out there. Have you heard any information from that owner? And is there any opportunity for them recover possible damages from that, where that occurred?

ALDERDEN: I haven't heard anything about that. That obviously occurred two counties away, in Adams County. It was a wheat field. I don't know what damage, if any. And certainly if he were to recover any damages, that would be a civil matter between him and the parents of this boy, I believe.

QUESTION: Sheriff (OFF-MIKE) and what is that you didn't ask that you really wanted to clear?

ALDERDEN: Well, again, I think we asked all the pertinent questions yesterday during the course of this, but, obviously, in light of the interview that was done last night, and then in light of the boy's statement, we want to re-interview them and try to clarify that and put that to rest.

QUEST: So the sheriff of Fort Collins, Colorado, giving us some more information about the events of yesterday. This time yesterday, of course, you'll be aware, the -- well, extraordinary events of the balloon boy.

So to bring it up to date, let's get rid of some of the myths that you may have heard. The first one is, the sheriff said that their research showed that the balloon would be powerful enough to lift a boy of that weight, and dispels all the nonsense that people are saying is that they should have realized that it couldn't have carried a child of that weight. Apparently the professor at the state university said it would.

Secondly, the sheriff explained why, when they conducted three searches of the house, they didn't find the boy, who was in the attic, in the garage, he said that's because it didn't seem likely that the boy would be able to get up to that part of the attic. And of course, he did accept now, of course, that they should have looked there. And he said the one place they did look -- that they didn't look was, of course, where the boy was.

On the question of whether or not they believed this story from the parents or do they believe it's a fake and a hoax, they said they don't believe it's a fake and a hoax. As a result of the non-verbal communication, the child didn't look like he was being coached or coaxed. He said the child was hyperactive and it would have been just about unthinkable that this child could have spent five hours in an attic being told to stay there by his parents.

But the sheriff did say that they would be having further interviews with the parents to see if their story still hold water. Fascinating story. Needless to say, it's the number one story that people are interested online, people are following on Twitter and elsewhere.

Now other news headlines for you this Friday. Max Foster is at the CNN news desk.

MAX FOSTER, CNN INTERNATIONAL ANCHOR: Richard, Zimbabwe's prime minister is boycotting his nation's unity government for now over the detention of a senior opposition politician. Morgan Tsvangirai describes the arrest and scheduled trial of Roy Bennett as persecution. Bennett is charged with a weapons violation. He was granted bail earlier today. Tsvangirai and President Robert Mugabe reached a tenuous power-sharing agreement early this year.

As terrorists strike again, Pakistan's army chief met with political leaders to discuss security in the planned offensive against militants in south Waziristan. Thirteen people were killed in today's attack in Peshawar, when a suicide bombers detonated a car bomb near a mosque and a police station.

Debt-ridden farmers staged a fiery protest on the Champs-Elysees in Paris. Around 150 farmers filled the famous boulevard with hay bales and set them alight. They're campaigning for financial aid to cope with slumping grain prices. Over 50,000 farmers joined the nationwide campaign.

Those are the headlines. Don't forget to tune in for more on the day's biggest stories, "WORLD ONE," 8:30 p.m. London time. Back to you, Richard, in the studio.

QUEST: We thank you for that, Max Foster.

When I come back in a moment, I will have some balloons of my own. It's the Q-25 tonight on (INAUDIBLE).

(RINGS BELL)

(COMMERCIAL BREAK)

QUEST: Welcome back, a blow from Bank of America has left investors smarting. The nation's (INAUDIBLE) the U.S. is in the red. The latest in a catalog of setbacks for the troubled lender. It comes on the back of results, of course, from Goldman Sachs, Citigroup, which, of course, made a profit, and JPMorgan Chase.

BoA, which bought Merrill Lynch, of course, BoA had a Q3 net loss of $2.2 billion. Now we've got this number of 2.2 billion, it's worse than expected. We get the number by moving things around a bit, by pointing out government debt and things like that, warrants that had to be bought and paid for. It was just bad news for Bank of America.

And it reinforces the view that those banks that are primarily retail or consumer in nature like Citi are bearing the brunt of the -- of what is taking place, because home loans, consumer credit, these were the reasons why Bank of America simply couldn't eke out into a profit. They wrote down vast amounts on credit cards and elsewhere.

But it is pointing up -- you know, BoA did make money in the last quarter. So one has to question how many more quarters they're likely to get of this sort of misery.

Now come with me as we move back further and you will see Mattel. Look at Mattel over here. Mattel saw third-quarter net profits down 3.5 percent. The interesting thing about Mattel, to have a decline in this, people clearly are not -- not only are they -- Barbie, for example, Barbie celebrating 50 years, sales were down 7 to 8 percent.

So Mattel, we've chosen this as one of our Q-25s, as a good example of a consumer stock that wasn't managing to get any traction.

Let us put it all into perspective, before we bring in Maggie Lake, these are the Q-25, balloons of our own. Bank of America, there was clearly little doubt it gets a red balloon, no problem with that. When we talk about Mattel, again, Mattel had pretty awful numbers considering Barbie, a red balloon for that. We're now starting to see reds heavily outweighing greens. Maggie Lake is in New York.

Maggie, the Q-25 up and running. Really, let's leave BoA and Mattel alone. Where do you want to start next?

MAGGIE LAKE, CNN INTERNATIONAL CORRESPONDENT: Well, let's start with another obvious one, Richard, in Google. This company just goes from strength to strength. They had a big increase. Revenue was up 7 percent. And they also say they're hiring again, they're spending again on acquisitions. We are open for business. They see a real wind of optimism. So they are absolutely a green.

QUEST: We took a vote, there are four of us on the line today. There was -- oh dear, the air is coming out of me balloon, never mind. That's...

(LAUGHTER)

QUEST: ... a green balloon for Google.

Now, now it starts getting really interesting. GE, General Electric.

LAKE: Yes...

QUEST: Come on, now (INAUDIBLE)...

LAKE: ... GE, and of course, everybody looks at this big...

QUEST: Profits down -- profits down 45 percent. Revenues down heavily. There was nothing good about GE's numbers.

LAKE: Yes, there really wasn't. And you know, they did say they see things stabilizing, but that doesn't get you a green. I think it is absolutely a red.

QUEST: A red. There was no dispute. General Electric, which is really important, because they often say about GE, the significance of what happens with GE, because of its tentacles in the economy.

All right. Maggie, last one for today.

LAKE: This was the tough one, Richard, very difficult, IBM. There was a little bit for everybody in here, as you know, because we had a big discussion on the call. You know, net income rose, but sales were down 5 percent. It was the fourth straight quarter revenue was down, but -- and this is the part I was paying attention to, they boosted their earnings outlook.

They have some visibility, and they say things are getting better. They're also getting a bigger portion of their revenue from their high margin software. Again, that's the future. So I'm going to give them a green, but ah, very reluctantly, I have to say.

QUEST: No, come on, you're coming off the fence here. You were hard for a green when we spoke earlier, along with your producer, David (ph), and my producer, Simon (ph). I was outvoted three to one. I'd have given a red to IBM. I think their results were poor. I think their network services numbers were down. They didn't show revenue strength.

LAKE: That's true. And those are all good points. And the fact that I'm willing to give them a green on what they say might happen, it's sort of like "show me the money," which is why I backed off my confident vote from earlier, and I'm a little bit more sitting on the fence now.

QUEST: All right. Too late. They get a green. This is where the Q- 25 ends this Friday. Maggie Lake in New York, many thanks. Have a good weekend, see you on Monday.

Three greens, one, two, three, four, five reds. The reds have it at the moment. We've still got a long way to go and many more balloons there to blow up.

When we come back in just a moment, we're going to be taking flight. Wi-Fi is taking off, just how connected do you really want to be when you are up in the air?

(BEGIN VIDEO CLIP)

RON LEMAY, PRES. & CEO, AIRCELL: The longer the flight, the more attractive this proposition is to people. We've also seen, though, our paid sessions, these are people paying the full fare, grow by 6 percent per week. Airlines need ancillary revenues. This can put millions of dollars per year on the airline's bottom line.

(END VIDEO CLIP)

QUEST: Revealing the window into cyberspace in just a moment, QUEST MEANS BUSINESS, good evening.

(COMMERCIAL BREAK)

QUEST: Welcome back. QUEST MEANS BUSINESS. If there is one thing that perhaps gets frequent fliers enraged and up in arms about -- besides babies in business class, it is how connected we wish to be when we are up in the air.

Do we want Internet? Do we want Wi-Fi? And do we want voice telecommunications? These days going on board no longer means going off- line. It comes at a price.

(BEGIN VIDEOTAPE)

QUEST (voice-over): For years the sky really was the limit when it came to being connected. Now planes are entering cyberspace, and the race is on for airlines to become wired. Virgin America was the first to introduce Wi-Fi throughout the fleet back in May.

Six additional North American carriers now offer the service on selected routes. And business travelers are keen to log on.

UNIDENTIFIED MALE: If you're doing a lot of day flights, it's quite good to sort of clear your inbox and sort of, you know, get rid of a lot of wordy (INAUDIBLE) when you're in the office.

UNIDENTIFIED MALE: You can use it for whatever reason you want, entertainment, or if you want to send your e-mails, or business reasons, whatever. It's a good thing, definitely.

QUEST: According to recent studies by the Wi-Fi Alliance, 76 percent of business travelers would choose to fly with an airline based on Wi-Fi availability. Seventy-one percent would have rather Internet access than a meal.

If business travelers are choosing BlackBerrys and screens over strawberries and ice cream, clearly it's time for airlines to revise the on-board menu.

DOUG BACKELIN, AMERICAN AIRLINES: American Airlines introduced Wi-Fi Internet on August 20th of last year. We were the first airline to introduce the Aircell product, and the first U.S. airline to introduce Wi- Fi Internet. We are finding with -- through our own experiences with Wi-Fi today that well over 40 percent of the people that use Wi-Fi on American Airlines once, use it again. And that percentage and number is growing.

QUEST: American Airlines uses Aircell's Gogo in-flight Internet, and prices range from around $6 to $13, depending on the length of the flight. When testing out different pricing structures. The amount charged can make a big difference. Alaska discovered that when it charged a $1 connection fee, Internet usage significantly.

Still, Aircell is confident passengers will be paying to log-on.

LEMAY: I think the facts on Alaska Airlines are they were doing that on very short flights on the West Coast. The longer the flight, the more attractive this proposition is to people. We've also seen, though, our paid sessions, these are people paying the full fare, grow by 6 percent per week. Airlines need ancillary revenues. This can put millions of dollars per year on the airline's bottom line.

QUEST: Last year, Wi-Fi hotspots on the ground generated $2 billion of revenue. If Wi-Fi proves to be a hit in the air, will business travelers be calling for cell phones on planes?

UNIDENTIFIED MALE: Definite no. One hundred percent no. For someone that travels three times a week, like I do, on a plane, you would not be able to survive that job if someone is on the phone the whole time.

UNIDENTIFIED MALE: Probably, but I think, you know, if you're on a night flight back from New York or something like, definitely not, because you wouldn't be able to get any sleep.

BACKELIN: We are hearing quite loudly from our customers at this point that they do not want cell phone service, particularly voice service. We know on the aircraft they don't want to be bothered by ring tones or chatter around them.

UNIDENTIFIED MALE: Yes, it's a bit chaotic.

(END VIDEO TAPE)

QUEST: So, to be or not to be connected, that is the question, whether it is better to surf or remain undisturbed, you, the traveler, ultimately decide.

Now, when we come back, it may be the age of austerity. Prudence is pride. When we come back, the man who's building this in Morocco.

It's luxury, but, well, is it right for our times?

In a moment. Don't go away.

(COMMERCIAL BREAK)

QUEST: Good evening.

I'm Richard Quest, QUEST MEANS BUSINESS.

This is CNN.

Two weeks from today in Morocco, a new major luxury hotel will open.

Are they mad, opening a luxury resort at a time like this?

Sol Kerzner has a bit of experience on this front. His Atlantis and his Palm Beach Dubai hotel opened a year ago, just as the recession was heating up. He's about to do it all over again.

Sol Kerzner joins me now.

We'll get to the Dubai bit in a moment.

Let -- let's be honest now.

If you weren't already building it, The Morocco and Dubai, would you have built it?

SOL KERZNER, FOUNDER, KERZNER INTERNATIONAL HOLDINGS: Probably not. It's -- on the other hand, we were in the ground with all three projects. We were in the ground with Atlantis on the (INAUDIBLE) in Capetown and Maghnia (ph), Morocco. And (INAUDIBLE) we opened the Atlantis at the Lehmans and all this stuff began happening. And, you know, my view was, well, we are there so we'd better make a success of it.

And, fortunately, I was going to say that the Dubai Unis (ph) has done very well.

QUEST: But you've got to admit the timing -- I mean I can just see the...

KERZNER: It's not great.

QUEST: It's not great.

KERZNER: Not at all.

QUEST: Were you able to keep laughing as you watched the properties make losses?

KERZNER: Well, fortunately, we haven't been making losses. But the earnings aren't where they -- where we would have hoped they'd be a couple of years ago.

Dubai has been pretty good. It's run at about 80 percent with pretty reasonable room rates. Capetown is slow in the winter, so it should get going now and we'll be all ready for the World Cup.

QUEST: Let's talk about the World Cup. There's been a lot of dispute about whether there's going to be enough rooms, enough of that. Now, I understand your one and only there -- you know, (INAUDIBLE).

When -- are you -- are you satisfied with the organization of the World Cup 2010?

Do you think that South Africa and the organizers have got a handle on it to get it going well?

KERZNER: You know, that had been something that I was personally concerned about. But when I see the progress that everyone's made in terms of the transport, in terms of stadiums right next to one another, you know, the new stadiums opening and being -- you know, this -- it's being built by the same folks that built the hotel. And I've got to say it's coming together pretty well. And I think it's going to be a huge success.

QUEST: Looking at this new property in Morocco, again, another property in the height of a recession.

Which are you attracting?

Who do you believe has got the money these days for luxury premises and properties?

Or am I just a pauper that's not really feeling it -- I'm not -- I'm not your clown?

KERZNER: Listen, first we -- the -- the rates are not going to be crazy, I mean, perhaps $300 or $400 a night.

QUEST: Huh?

KERZNER: That's not too bad.

QUEST: Two or three hundred?

(LAUGHTER)

KERZNER: And we're going to have -- firstly, start with a Gary Player (ph), a golf course, 18 hole. And I spoke to Gary the other night. He's very excited. And we have...

QUEST: Well, I'm just curious, when this recession shakes out, what do you think will be left standing?

What do you think?

Do you think there has been a shift in what people will want from -- or will there be a return back to quality, do you think?

KERZNER: You know that, quite honestly, we have half a dozen one (INAUDIBLE). And that's the top end of the range. And I've got to say that although, obviously, we felt -- or have felt the recession. Occupancies aren't exactly where we'd like them to be -- you know, they -- they're still holding up reasonably well. And...

QUEST: You're profitable?

KERZNER: Yes. Oh, absolutely. Not exactly where we'd like to be, but certainly it's profitable. And occupancies are under pressure. But nevertheless -- I also think people love quality and they love value for money. And I believe even in good times, value for money always counts.

QUEST: I always ask every hotelier that I interview at this time of the crisis, are you holding the rate, because -- or are you getting rate battered?

Are you trading rate for occupancy?

KERZNER: Absolutely not. We are holding rate. We may be marginally less but, you know, there's a tendency -- and you can take places like Las Vegas and, you know -- and see that -- how rates have been chopped up. But I think that it's a bet. I think that if you've got a good quality and -- and keep marketing.

QUEST: Good luck for two week's time.

KERZNER: Thanks very much, Richard.

QUEST: Many thanks to you.

We'll love having you on the program.

KERZNER: It's very good to see you.

QUEST: Thank you very much, indeed, for coming in.

KERZNER: All right.

QUEST: Sol Kerzner joining us tonight.

You hear the chief execs on this program.

Now we take -- change gears from big bucks to bargain hunting. It might actually be one and the same.

(BEGIN VIDEOTAPE)

QUEST: How much?

UNIDENTIFIED MALE: One rupee, right?

QUEST: Two hundred. Oh.

UNIDENTIFIED MALE: One rupee.

(END VIDEO TAPE)

QUEST: I can't imagine Sol Kerzner ever buying one of his ties in this market.

Back in a moment.

(COMMERCIAL BREAK)

QUEST: Welcome back, QUEST MEANS BUSINESS.

It is the end of the week and the markets are open in New York. News update...

(RINGS BELL)

QUEST: Oh, the bell is working tonight.

Oh, tanta -- tantalizingly close, down just 64 at the moment, .5 percentage point. I just wonder whether three -- 10000 is going to be it, whether it will hold the line tonight, as we go into the weekend. Bank of America is weighing heavily on the market.

All sorts of results that have taken place. The European bourses and (INAUDIBLE) took place in Asia. The disappointing earnings sent stocks in Europe tumbling. The major indices all fell. The market in Paris and Frankfurt, they were down 1.5 percent. The FTSE was off just a third of a percent. Commerce Bank down 3 percent in Germany. BMP (ph) was dropped by almost as much.

To Asia now, where they followed the trend. The big losses were in Seoul. Japan's Nikkei edged a fraction higher. And it really was just a fraction higher. That was retailers that were the gainers in the Tokyo market.

Earlier this week, I was in India. And that much you are aware. Whilst I was there, I took the opportunity of learning some new skills, some new tricks. I also decided it was time to update my wardrobe. And when in India, you haggle.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Twenty, twenty, twenty!

QUEST: How much?

UNIDENTIFIED MALE: Seventy-five.

QUEST: Seventy-five.

UNIDENTIFIED MALE: Yes, sir.

QUEST: That's about $1.50.

(CROSSTALK)

QUEST: Some short ones.

UNIDENTIFIED MALE: Short ones (INAUDIBLE).

QUEST: How much?

UNIDENTIFIED MALE: Seventy-five.

QUEST: Seventy-five. That's over a dollar.

UNIDENTIFIED MALE: Dollar?

One rupee. Yes.

QUEST: How much?

UNIDENTIFIED MALE: Seventy-five.

QUEST: How much?

UNIDENTIFIED MALE: Seventy-five.

QUEST: Seventy-five.

UNIDENTIFIED MALE: Yes.

QUEST: Fifty.

UNIDENTIFIED MALE: No.

QUEST: All right. Seventy-five.

Everything costs 75 and you never actually get the change.

How much?

UNIDENTIFIED FEMALE: Two hundred (INAUDIBLE).

QUEST: Two hundred. Oh. No, no, no, no, no. One hundred. One hundred. One hundred.

UNIDENTIFIED MALE: Forty-one (ph).

QUEST: Now we're talking.

How much?

UNIDENTIFIED MALE: One fifty.

QUEST: One fifty.

UNIDENTIFIED MALE: (INAUDIBLE).

QUEST: So why am I -- why am I paying 150 and he's going 100?

UNIDENTIFIED MALE: (INAUDIBLE).

QUEST: Now the price is coming down (INAUDIBLE).

Thank you very much. Thank you very much.

UNIDENTIFIED MALE: Thank you.

(END VIDEO TAPE)

QUEST: It looked a jolly sight more interesting the way he was holding it in the market. Something tells me my producer is not going to be very happy with this marketing as a Christmas present.

All right, that's QUEST MEANS BUSINESS for tonight.

I'm Richard Quest in London.

I thank you for your time and attention this week. We've had some fun and brought you some good information.

Whatever you're up to over the days ahead, I do hope it's profitable.

"INSIDE THE MIDDLE EAST" is coming up next.

I'll see you back here on Monday.

END