Return to Transcripts main page

Quest Means Business

U.S. Hotel Industry Warns Of More Layoffs Without Further Aid; Dow Sinks As U.S. Executives Call For More Stimulus; Restoring The Seychelles' Vanishing Coral Reefs; Volkswagen Unveils ID.4, Its First Electric SUV. Aired 3:30-4p ET

Aired September 23, 2020 - 15:30   ET

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

[15:30:00]

(COMMERCIAL BREAK)

ZAIN ASHER, CNN INTERNATIONAL HOST: Good evening, I'm Zain Asher. We'll continue to monitor the breaking news from Kentucky. But now, the breaking

news in the business world, U.S. markets are continuing to fall sharply. The three major indices firmly in the red. The Dow now down more than 400

points, almost 500 points after starting the day with slight gains. Tech and energy stocks have been the worst performers.

[15:35:06]

Paul La Monica joins us live now. So, Paul, the Fed at this point is really warning that more stimulus is needing to rescue the U.S. economy. Just walk

us through the market reaction to this.

PAUL LA MONICA, CNN BUSINESS REPORTER: (AUDIO GAP) the Fed, they've done a lot to support the financial markets and by extension, the economy a little

bit. But as we all know, the stock market is not the economy, the Federal Reserve can only do so much, and with an election coming up, and there

seemingly a stalemate between the White House and Congress about future stimulus for consumers and small businesses struggling because of the

COVID-19 pandemic, investors are very worried. You know, Powell can't do it all by himself. There are only so many times the Fed can save the day. And

I think that's when a lot of this selloff has to do with today.

ASHER: The Nike shares, their shares are up about eight percent or so after reporting much better than expected earnings, really showcasing how Nike

has used the pandemic as an opportunity to really push start digital sales. Digital sales, according to their earnings, up about 82 percent or so.

LA MONICA: Exactly. Nike is the best Dow component today. One of only two that is up. J&J is the other one at last check. Nike is really seeing a

strong rebound around the world. Places like China and Europe that obviously were hit earlier than the U.S. in the COVID-19 pandemic. So, if

anything, I think it is an encouraging sign that you're seeing those markets rebound perhaps if the U.S. can finally get past Coronavirus, then

we might see an increase in sales for Nike in North America, as well. But Nike investors obviously happy about what's going on with the rest of the

world. And as you nailed it, digital sales, they are doing extremely well and doing it by themselves. I mean, this SNKR app, their sneaker app has

been really great for them. And it shows that you don't need Amazon if you have a strong brand.

ASHER: And the new CEO John Donahoe, who took over from Mark Parker, he took over in January, what has the last nine months been for him? Because

obviously, just in terms of digital sales, he came from a very sort of heavy tech background in terms of coming from eBay, PayPal service, now

what of the last nine months been like for him?

LA MONICA: Yes, I think that Donahoe has done an admirable job of really showing to Wall Street and consumers that Nike can be a consumer tech

company, in addition to a consumer products company. And that is obviously very, you know, much needed for Nike, especially since, you know, this is a

company that has had some criticism, particularly from the right politically, because of its strong stance, they have supported Colin

Kaepernick and the Black Lives Matter movement. And despite some calls for protests among conservatives, I think younger consumers are showing with

their money that they support Nike and the fact that Nike is continuing to support Colin Kaepernick and the BLM movement.

ASHER: Paul La Monica live for us there. Thank you so much. Nearly three- quarters of U.S. hotels say they have to lay off more employees if they don't receive a new round of government stimulus. That's according to a

survey from the American Hotel and Lodging Association, and the association CEO Chip Rogers joins us live now from Washington. Chip, thank you so much

for being with us. So, just walk us through, you know, as the new stimulus round sort of hangs in the balance, what's at stake now for the hospitality

industry?

CHIP ROGERS, CEO, AMERICAN HOTEL & LODGING ASSOCIATION: Well, thousands of hotels and millions of jobs, frankly. You know, if you think about this

process, we had the original CARES package way back in March. And some of the money started flowing in April. But that was a -- that was a lifetime

ago. And that money was intended, even according to the law to only last eight to 10 weeks. So, now you have these thousands and thousands of small

business owners. And that's what the hotel industry is, small business owners, who are running out of money. And many places, there are shutdowns,

there are quarantine rules. There's no business travel. And so, they're on the brink of collapse.

ASHER: So, even once there is a vaccine, even once things are back to normal, and there is a new round of stimulus, what do you think the hotel

industry in this country looks like one to two years from now? Do you anticipate that there will be perhaps fewer hotel chains? Do you anticipate

that perhaps, you know, they'll only be -- there'll be more hotels in sort of big cities compared to more rural areas? How will COVID-19, the

pandemic, change the hotel landscape in this country permanently?

ROGERS: Well, it's interesting. Right now, it's actually the reverse of what you just suggested. It's the urban areas that are getting destroyed.

The interstate markets, some of the vacation markets are hanging in there. They'll be able to survive a little bit longer. But when you see hotels

like the Hilton in Times Square in New York, shut their doors, shut their doors for good and things like that. I mean, this is just a travesty.

[15:40:10]

And it is these urban centers where all the jobs are located, that are being devastated by this because there are no large conventions and the

business travel that really helps those hotels make it, that business travel is gone. So, when we compare the urban center hotels to where they

were this time last year, they're down by about 70 percent in revenue, and that's just not sustainable.

ASHER: So, is the hotel sector, you mentioned, the cities are faring worse off than perhaps rural areas. How will rural areas be able to stay afloat a

little bit? How would they be able to hold on that much longer than perhaps more urban areas? Is it by appealing to people who are local travelers? Is

it about appealing to more domestic tourists? What are your thoughts on that?

ROGERS: Well, right now, what's happening is more people are driving and that's a good thing for those interstate-based hotels, people are getting

in their car, price of gasoline is very low. And they don't want to get in an airplane. Though, I fly a lot, and I have no problem with it. But in

addition to that, it's just the overall cost. If you think about the property taxes, the mortgage that you have to pay or the debt you have to

pay on that hotel, and the number of people that work at the hotel, it's much lower cost to run one of these non-urban hotels than it is in an urban

center where you get all the regulations, all the taxes.

They're usually full-service hotels with hundreds, if not thousands of employees, sometimes tied to a convention center, all that activity is

gone. So, it's much more expensive to run those urban hotels. And that's why we believe that the non-urban hotels will be able to hang on a little

bit longer. But it's really bad for everybody right now.

ASHER: And even once there is a vaccine, even once, as I mentioned, things are back to normal, how long do you think that travelers, tourists,

potential clients will continue to still adopt precautionary behaviors well into next year?

ROGERS: You know, I think the tourist and the leisure market actually has performed OK this year. But remember, that's only a small percentage of the

revenue that's generated in the hotel industry. And so, when we get past the vaccine and the therapies, which seemed to be going quite well, I think

that leisure travel will bounce back quicker than anything. It's the business travel, but more importantly, the meetings, conferences and

conventions that we're most concerned about, because those are the type of events that may not come back for a year or two years, maybe even three

years.

ASHER: So, meetings, conferences and conventions. That's what's really hitting hotels in the urban areas. Chip Rogers live for us there. Thank you

so much. Appreciate you joining us. We'll be back with more QMB QUEST MEANS BUSINESS in just a moment.

(COMMERCIAL BREAK)

[15:45:28]

ASHER: As part of our "CALL TO EARTH" commitment, sharing solutions to critical issues impacting our environment. All this week, we're

highlighting biodiversity and the efforts of those working to protect ecosystems around the world. Healthy ecosystems are essential for providing

fresh water, food and protection from extreme weather events worldwide. We bring you the stories of those doing extraordinary work at the frontlines

of conservation, protecting biodiversity to create a better, more sustainable future. Today, our coral nursery in the Seychelles could help

turn the tide on biodiversity loss.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: On a stormy Tuesday in the tropics, Leo Barret and his team prep for an afternoon dive, a thorough check of the gear, a walk down

to the docks and into the Aqua marine waters, home to a project aiming to restore the coral population of the Seychelles.

LEO BARRET, PROJECT LEADER, MARINE CONSERVATION SOCIETY SEYCHELLES: So, in Seychelles, we lost during the 2016 bleaching events up to 90 percent of

the coral reef at certain site. Precipitate means the loss of biodiversity, a lot of loss of fish, a loss of structural complexity.

UNIDENTIFIED MALE: To help restore the ecosystem here, Barret and his team started underwater coral nurseries.

BARRET: So, the first thing is to research some coral fragment. So, this coral fragment are at a minimum size of five centimeters. They can be

already broken off corals colony or we can choose some specific coral colony that we know that have survived the last bleaching event or we know

that are a bit more resilient to climate change.

UNIDENTIFIED MALE: The coral are attached to a rope and cleaned by hand until they have grown large enough to be transplanted back into the reef.

BARRET: We wait for one year, one year and half until they reach a good size. So, it's between 15 to 20 centimeters of diameter, and then we trust

on them on the sea floor.

UNIDENTIFIED MALE: Barret hopes the surviving coral they've selected as the foundation for the new growth could potentially weather future climate

events.

BARRET: Around 2,100. There will be no more coral reef on Earth (INAUDIBLE) So, we are really in a critical moment. We've got mass extinction. And the

idea is really to help the natural recovery by putting more volume of corals in the water.

UNIDENTIFIED MALE: Barret's work is important, not just because of why it's happening, but where it's happening. The Seychelles itself is an

archipelago, made up of about 115 islands in the Indian Ocean. With tourism as the backbone of the economy and the natural landscape, the reason for

that tourism. It's a delicate balance between enjoying the beauty here and protecting it. The team works mainly on Surf Island, but the project has

expanded into a partnership with local hotels and resorts.

BARRET: We start in 2015 to work with one of the hotels. This project works really efficiently. And the collaboration with the private sector with our

test was super nice. We provide some guests enrichment activities. Really, I think it's important to educate people.

(END VIDEO CLIP)

ASHER: And we'll continue showcasing inspirational stories like this as part of the initiative at CNN. And let us know what you're doing to answer

the call with the hashtag #CallToEarth. We'll be right back.

(COMMERCIAL BREAK)

[15:50:00]

ASHER: Volkswagen is lifting the herd on its new electric SUV. The ID.4 is the company's first long range electric vehicle to hit the U.S. market.

It's currently made in Germany with plans for production in the U.S. and China. Scott Keogh is the CEO of Volkswagen of America. He joins us live

now from Herndon, Virginia via Skype. Scott, thank you so much for being with us. So, on the market right now here in the U.S., you've got lots of

affordable electric vehicles, but none of them are SUVs. Just walk us through how this new vehicle the ID.4 actually fits in to the future of

Volkswagen?

SCOTT KEOGH, CEO, VOLKSWAGEN OF AMERICA: I think the future of Volkswagen is obviously about electrification. We see a massive opportunity here. The

biggest driver of making that happen is, of course, get into the big segments of America and get the right price point. So, this vehicle

competes in a compact SUV. That's the largest segment in America. 4 million cars sold a year, 35 million of them on the road, and not one of them is

electrified. So, we think there's a massive opportunity. The second thing is the price point.

And if you take out the federal rebates, you know, we have a car that's at $30,000 for a high tech spaceship. So, I think that's going to drive

adoption. And that's exactly what we're looking for. We have a better product. We have a higher tech product. And we can bring electrification to

the masses. I mean, that's what Volkswagen has always set out to do for the people. And that's what we've done here. So, actually, we're very excited.

ASHER: Yes, you mentioned the future of Volkswagen is about electrification. And just given how much money you're investing, that's

definitely seems to be the case. Volkswagen is investing about 33 billion euros total on electric vehicles between now and 2024. OK, it looks as

though we have to interrupt. Scott, I apologize. We are going to Kate Bolduan on CNN U.S.

END

END