YouSaid · the spoken record

Eric Resnick

lines on the record: 64
first: 2023-06-19
most recent: 2023-06-19
sittings or episodes: 1
sources: podcast

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“Certainly than me, and hopefully I'm playing catch up in a good way. Eric, thanks so much for sharing this really fun story about this sector we all know and love. Thank you, Ted. A lot of fun being with you. Really appreciate it.”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“What was the best advice you ever received? It was from Terry Williams and McKinsey to combine vocation with advocation, no doubt. What teaching from you? Parents has most stayed with you. Do things the right way, meaning it wasn't about the grade, it was about learning. It wasn't about going after some brass ring as an ends that justified the means at all. It was about being a good person, prioritizing the right things, and never losing sight of family being most important. And I hope that I've gone through my career, I've done that. All right, Eric, class one. What life lesson have you learned that you wish you knew a lot earlier in life? I just turned 50 this year, and I feel things seem to break on a, it's like an old car that things just start to break, and you have to get a new this, that, or the other thing. I think it would be to focus on your health, your fitness, your diet before you actually have to. Back when you think you're invincible, you're in your 20s or 30s, get that lesson, get that religion earlier. Some have been better at that.”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“Two people have had the biggest impact on your professional life. Mike Shannon and a fellow named Steve Benedeck. Steve was a Hungarian refugee when the Soviets came into Hungary in the mid-50s. He escaped and he came to Washington DC or the suburbs and start up a sports camp. He had been an Olympic coach for the modern pentathlon. And he started up a sports camp in that vein, horseback riding, swimming, running, all sorts of team sports. And I went there for a dozen years, and I was a counselor there for about five. He was Eastern European, strict mindset. I think it was probably 10 years before he paid his first compliment to me. But he really engendered an ambition, a work ethic, and an understanding of if you work hard at something, you can achieve it. And he passed away a number of years ago. But he had a tremendous impact on me. And in addition, of course, to a lot of other people on the way, I'd say Mike and Steve.”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“We have a page in every one of our investment decks. I'm sure every firm has some version of this. If one page just shows all the pros, all the investment opportunities, and then when it shows the risks, and next to the risks, there's always mitigance. And it's almost like every risk always has a mitigation. A not accepting that the reality is some risks are actually just risks. There's no mitigant. You can't generate 15, 20% returns without actually taking risks. So not every risk is mitigated. Some aren't and they can go wrong. That to me, I think, is a pet peeve. I realize why we tend to do it that way, but I think that's overdone. What mistake have you made that you'd never make again? We talked a bit about it earlier by I think it's not verifying enough when you're in a very charismatic founder situation. And we've had some situations, by the way, that have gone very well with very charismatic founders. But when it's a little bit outside of our domain expertise in particular, I think we were a bit more exposed. I would never want to do that again. I'd want to be very careful.”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“Some would argue that it is both work and family plumbing, but skiing would be probably my number one. With golf increasingly coming up the priority list. And just in general, I'm a sports fan. What”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“I have had the great fortune of working with Mike Shannon, who, when we set the firm up together, which we did in 05 together with a few others who came from the historic KSL recreation as Park AKAR, Mike had the foresight to really plan his succession well. He retired about five years ago. I hope over the next decade, say, that I'm able to be similarly thoughtful in setting the firm up for the next 20 years of growth. That to me would be one of my top goals.”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“Interest rates being as high as they are, unfortunately will cause unintended consequence and problems with people's balance sheets becoming upside down. And we have the capital, we can invest in it. We're talking about equity investments a lot here, but we also have debt capital and capital that's very flexible to be able to provide a capital solution to people of upside-down balance sheets. I think that's going to be an opportunity for us to partner with people to help them solve their problems. Because the last thing someone wants to do is sell an asset not at the right time. And so we can provide capital to avoid that. Or if someone does decide to sell and need to sell and there will be that too, we have that capital, of course, to deploy. So I think the next two years, one in every ten years, you get one of those moments where you have a dislocation. And we had in the early 90s, we had it in the early 2000s. We had it in 0708. We had it in 1920. So maybe this one's coming a little bit sooner. But basically, once a decade, you get that opportunity. And those opportunities for us provide superior risk adjusted return potential.”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“What's most exciting to me, not just over the next couple years, is this trend that people want to experience the world fundamentally. It's undeniable. Once you're taking care of your basic needs, food, shelter, health care, education, and so forth, and you get to that next level of sustainability, of income and wealth and so forth, you start to want to explore. And that sense of exploration, which is undeniable, and by the way, also is not satisfied in the metaverse or through social media, if anything, when you see places online, it makes you want to go there in person even more. When you pair that with the growing trends towards more awareness of the importance of activity and health and wellness, what we've seen in the last 60 years of just ongoing growth in travel as there's been more wealth in the world, I think that's only going to accelerate. So that gets me most excited. What I really like about the next two years is the combination of what I just said with”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“Use less leverage than most than our peers by a reasonable margin. That's not been our issue. It's really been, I would say that's what we've fallen victim to in those two cases”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“We're very fortunate. We've lost money twice across however many hundreds of investments we've made. The two times we've lost money, if you can create a theme, I would say is we had a very charismatic seller slash founder of a business that was staying involved and it was a business that we didn't have as much domain expertise in going into it. We had this old saying trust but verify we probably trusted a little too much and verified not quite enough. And this is the same for Mike Shannon, my co-founder, but he used to describe things as there was the Ronald Reagan and the Nancy Reagan approach to things. And the Ronald Reagan was trusted by Verify and the Nancy Reagan was just say no if you remember 1980s lexicon. Trust but verify, I think that we were probably a little bit too trusting and with an overly charismatic leader it can be easy to probably do that. And I think that was probably the commonality between those two things that went wrong for us. I think for others, it's what we talked about earlier, I think leverage is often the enemy. We tend to use.”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“Empowerment. It's really about empowerment. A lot of the conversations we have, a lot of the frustrations we have are about how much do you centralize and dictate from above versus how much you empower people to solve problems from their own seat. That's empowering the CEO of one of our portfolio companies. It's also empowering the pool attendant at the pool to solve the crowding issue on the pool that day or the person who reserved the cabana and then it wasn't available when they got there. It goes up and down the chain. But I think empowerment while very inefficient to empower all your people to make individual decisions because at times you can feel it's like a box of chocolates. You don't know what you're going to get all the time, that leads to the best long-term outcomes. And I think we've evolved to that mindset.”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“Really is a four legged stool. It's the employees, it's our guests or our customers, it's the local community in which you operate, and then it's our investors. I think we're really good at building great businesses, building great teams, being a good partner of communities, delivering a great experience for the guest or the customer, and in doing that, our investors will do well. I think over 30 years that's been the case. And I think my hope is over the next 30 years that will be every bit the case, if not more so. But it's hard. And no doubt their employees, there are customers, and there are community members who would think that that's crazy. We're not doing a very good job of that in places. We literally probably have hundreds of thousands of guest interactions on any given day across the world. We cannot get them all right and community interactions. We have to be willing to admit mistakes and fix things when they go wrong. And if we're really good at that, in addition to the other things, then it all works pretty well.”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“We've talked about different aspects of this. Maybe in this business relative to others, it feels like there's an important broad base of constituents. You've mentioned having great management teams, the importance of the customer experience. Obviously, you're trying to generate returns. There's also a community like in the situation with the club. How do you think about balancing those interests?”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“If we can simplify that, stabilize it from a structural perspective, from a physical perspective, upgrade the asset, make sure it's in great condition, really show the market what. What we do is we open up the universe of more passive buyers to make an investment in that business. So it could be we buy something, we transform it, and we sell it to a return, more long-term owner. Great. That's terrific. It may be that we sell it to an individual who didn't see the opportunity in La Costa when we bought it and had to turn it around and invest half of what our purchase price was to bring it up to stuff. But the next buyer gets the benefit of a stabilized asset that they can then build off of. I think it depends on what the business is, but generally speaking, if we can do well by that asset, be a good caretaker of it and innovator of it during our period of ownership, these are very desirable underlying businesses. There's no shortage of people who would love to own it, and we can broaden that universe if we do our job right. And if you broaden the buyer universe, inevitably what that means is you can then get a more attractive price for it.”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“The career opportunities that we can offer to people to potentially move within management or within line operations between companies is really remarkable. We have a whole number, but I'd love to see us have more and more stories of people who they started in our golf business, they moved to our restaurant business, they then moved to the hotel business, they didn't decide they wanted to have an experience in Europe or Australia or Thailand or Chile, wherever it might be. So the career path, I think, is something which at the scale we have now, it's completely different. So our ability to acquire talent at the portfolio company level or at the fund level is completely different today than when we were five people in a trailer in Palm Springs, California. When you're thinking about exit strategy, you do have those assets that you want to hold in a continuation fund. For those that don't fit into that for whatever reason, when you're the large player in this specialized space, how do you think about who's there to buy from you? Fundamentally, if we can take a compliment.”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“I mentioned earlier the proprietary deal flow. It's really been transformative. The other thing I would say is our ability to get financing. During a hard financing market, we didn't have one for the last 10 years, but now we do. And we don't have a real issue getting financing today. It's more expensive. But we can get the financing we need for deals today. We can get our refinancings done. We're not particularly stressed about those things. When banks have to tighten up on their lending requirements and reduce their balance sheets to our sector, we're going to be at or near the top of the list of who they're going to lend to. And I think that's a logical reaction for banks to have to tighten in a market like this. But net, net, we become a winner because other more marginal competitors aren't able to get financing as easily. That's certainly one thing that's different today than it would have been when we got started because that was an advantage we lost when we were part of KKR. We could always get financing. Then we were independent and small and it was a bit harder, but the market was pretty free. But in a market like this, I think it really shines. A big part of it, I would say, is the people.”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“Or more of our businesses to be real estate intensive. And we don't think of that as capital intensive in a negative way because we're taking that into account in our underwriting and what we'll pay for that. But there's also some real benefits that get created by having it be a little bit more capital intensive. There's higher barriers to entry. There's an underlying floor value. Typically those real estate heavy investments are more financeable. They're more tax efficient. So that's a real positive on the real estate side. They're a natural inflation hedge. And then you balance that with, say, 20 or 30 percent of the portfolio that has more of a growthy consumer profile that may be less capital intensive, but that adds some extra alpha too. But there's probably a bigger range of investment outcomes if you get that wrong. You don't have that safety and that to fall back on as when you have a large resort hotel. What are some of the things that you're able to do being the scale player in the space that maybe you weren't earlier on as you were building up KSL?”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“A franchise like operating model and everything in between. As you're making an investment that has all this integration, how do you think about where to deploy your assets to get the most out of the investments? Portfolio construction has to be a big part of the focus for any investor. So from our perspective, we want to have appropriate diversity, but all within a sector. So you're making a sector bet, obviously, with travel and leisure, but we think of it as managing our corporate exposure versus our leisure consumer exposure, managing our international exposure versus our domestic U.S. or North American exposure, managing our more growth-oriented business exposure, unit growth-based business, or something that was more of a franchise business or a restaurant business that's more consumer-oriented than our more real estate type asset heavy exposure. And when you look at that, it's all about maintaining an equilibrium. We don't have a prescriptive way of doing it, but generally speaking, we want two-thirds.”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“The things that aren't and really focus on diligent those things that are most impactful. And looking as far and wide as you can for comparability. And now one of the things we look at a lot is, so how did something do during COVID? And before COVID, it was how did things do during the GFC? And we still have access to that data typically. So we've stress tested this industry incredibly significantly in the last two decades. And so we can look at that and say, how bad can it get? Think of it as the second standard deviation outcome. If that outcome is not too bad, if I can get my money back in even that outcome, it feels pretty good. Now I can focus a little more on the upside. What can we do? What can we do to transform this into something that the customer hasn't yet experienced in this market? What's the available employee base management team talent to be able to execute against that and start to focus on those things? Curious how you think about capital allocation. On one hand, you have real estate assets, capital intensive. On the other, you have”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“Just going to turn into a good outcome. I think you look at a few things to start, and that's like anything layers of the onion, you start peeling back. What's the addressable market? How big is it? Who else is doing something similar to what you're doing? Is there someone to aspire to that you can benchmark from? Do you have access to that data? What's most closely in our experience that we can look at that's comparable to the thing that you're trying to model? And then you're trying to build out a case of what you think is achievable with a reasonable margin of error. And in doing so, the one thing you know is that you're wrong the moment you start. That's the reality of every model. And we can't take them as gospel because only we've ever hit a model spot on. It's virtually impossible. So it's understanding the impact of different variables on the outcome. What's most important? What is highly impactful to the outcome and what isn't?”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“to the whole family. So we added lazy rivers, we added big pools, we added fitness centers. We created swim teams. We have a separate company now that has golf clubs and we're adding pickleball everywhere. We did family pasta nights. And yes, we made sure the golf club was great for the golfers and the family, whomever that was. We made sure there were junior teas everywhere. We had all sorts of summer camp programs. So when you do that in the club, you basically make it less exclusive, make it more active, and broaden its appeal. We found that to be a real formula for success. And I think that the consumer really wants that. I'd love to circle back to your days of when you were the financial modeler. I'm not sure I was ever very good at it, but I'm happy to try to go back to those days. How do you think about turning these assets that you're buying and improving into investments? What is it that you're looking at when modeling out to say, hey, this is...”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“Person is going to be able to create a private ski area. But 900 families at Yellowstone effectively have come together and they help to fund a private ski area. The same thing that's happening in golf or a health club doesn't have to be at the most exclusive level, but effectively a club allows you to get access to an amenity set that on your own you probably wouldn't be able to afford or recreate. So we think that's great because that allows you to have a theme around which to build. So golf clubs, for example. Golf clubs have a certain appeal if they're just targeted towards golf. We've always focused on what's a golf club experience that gets broader to really attract the whole family. So when we invested in a company called Club Corp going back to 2006, which was and is the world's largest owner of private golf clubs, it was founded on a basis of anyone who wanted to join could join as long as it wasn't full. It wasn't exclusive in that regard. Our focus became how do we modernize it so that it appealed?”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“But we need to be that curator for people. And we can do that in part through a more powerful app-based experience for our resorts. We can do that in part through our staff on property. But I don't think we can just rely on the internet to do it for us. TripAdvisor is good. It's not that good. There's still gaps there at the local level. And so I think if you think about that last mile of service execution, that's where we come in. When you start talking about stratifying the different customers you're serving, you get into clubs. What is the club business that you like to look at? We like varying forms of clubs. Clubs have a mixed reputation. Are they exclusionary? That's not the goal. When we think of clubs, we think of an opportunity for people with a like minded interest to come together and by pooling their resources effectively, they get access to something they couldn't otherwise get access to. Maybe I'm wrong about this, but no one.”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“Of your hotel state. Well, I think that there's certain things that you would have thought with the internet would have gone away. Travel agents, concierges. The reality is there's so much information available. There's clutter. How do you go sift through all the clutter to really curate the trip you want? And at the high end of travel, we tend to focus on the mass affluent. Think of that as the top 10% or so of income earners. They really are looking for a curated experience. There's a thousand different tours I can do in Provence. But which are the three that really I should consider while I'm staying there, when I'm going there from the United States and I really don't know it very well. I'm going skiing and steamboat and there's fifty different family activities to choose from for what to do in the evening or the afternoon or day off from skiing. Again, which do I choose? So I think we have to do a better job. I think we're getting there. There's more room left to run.”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“Or traditional bike tours. There's several companies that already do it. Perhaps we create our own. Perhaps we create a partnership with one that already exists. We could link that, for example. My wife actually was vacationing in one of our French properties last year called Capillon in Provence. And she's happening to tell me that there were numerous bike tour companies with their vans because I have to move all these bikes around in the parking lot. They were staying at our hotel and they were going out and doing rides in the French countryside in Provence. Why weren't we arranging that and going between the five or six properties that we have in France today? Why didn't we have our own tours that were doing that? We could partner with someone. We could provide it ourselves. So I think there's logical tie-ins with existing portfolio companies that would be, I think, very successful. We haven't quite gotten there yet. How do you think about the travel services around that? That's one component that tourist part.”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“Bike 30 to 50 miles a day for four or five days. We did one through Normandy with our family last year, which was just tremendous. The number of people who will do that will expand tenfold as people get more and more comfortable with e-bikes as a form of transportation. And you can still have a workout, but you can choose how hard you want your workout to be more at your pace than when you're biking in a traditional way like we were last summer, which was still wonderful. I think that's a trend that will continue to grow meaningfully and open up new travel options for people. When you see a trend like that, say the e-bikes as part of a vacation, how do you think about integrating that either separate business or is that something that you try to bring into when you're portfolio companies? Well, I think it depends. So within our ski resorts, for example, it's a natural add-on to do e-bike tours and e-bike rentals across our ski resorts, and we're doing that more and more. You could also have a whole new platform that focuses on e-bike tour.”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, to us recreation is all about combining activities that are healthy effectively where you can work out, get exercise in, that are also fun and shareable with people who are your closest friends and family. So skiing this year, for example, had its record year by far, ever in the history of skiing. Skiing's the perfect sport that fills that definition. There's no better vacation in my mind than a family skiing holiday. You're able to be healthy. You're able to be outdoors. You're able to do it with your kids, your closest friends, and loved ones. So that to me is growing. I think you're going to see more and more socially conscious travel that pairs recreational opportunities like biking. I think e-bikes are going to open up the world of travel in a whole new way because all of a sudden there's different companies that do bike tours and varying forms. Some are doing hiking tours, some are doing bike tours, but biking in particular, they've done bike tours through Europe for a long time. If you think about e-bikes, the number of people who will go on a bike trip.”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“by adding new locations. Those new markets are building off of the success and the model we have that we think we can replicate. So we'll look for other businesses that fit those themes. It's all about experiential, whether it's a certain type of resort hotel. We love eco-resorts, for example. We all want to be more conscious of our carbon footprint. We want to have experiences when we travel that are more indigenous to where we are. So we have wonderful tented resorts as an example at varying levels. You'll call it three to four star and five to six star, where you're staying in a wonderfully furnished tent. You're in the middle of nature, whether it's in British Columbia, on the inlets from the Pacific Ocean, or in the outback of Australia, or outside a national park in the US. Your carbon footprint is 80% less than what it would be in a traditional hotel. And you're basically living in the middle of nature, but you're not sacrificing a comfortable bed and a shower to do it. So to us, that's a great space to continue to grow in as an example within hospitality more broadly. How about trends on the recreation?”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“But it's opened up an opportunity for really high quality independent managers like Davidson to be able to manage franchised hotels that are franchised with those great brand names or independent hotels, which is another area that is growing tremendously because the internet allows us to get a sense of quality and what the experience is for an independently branded hotel that you used to rely on the brand name for. Now you don't have to do that. I can see pictures of the hotel room. I can see pictures of the amenities. I can see consumer reviews. So Davidson specializes in managing both types of those hotels. We see an opportunity to continue expand in that space. We think it's going to be a long-term growing space. And the other one is experiential dining or restaurants. So we own a business called High Hospitality that owns Uchi, which is a wonderful, think of it as like a nobu-like concept modern Asian Japanese fair. And we're in Austin, Dallas, Houston, Miami, Denver, soon to be LA, New York, Scottsdale. In that business, we see growing.”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“Try to provide a solution, and that solution gains opportunity for our investors. So that would be one area that we like a lot. How about the hospitality around the hotel? When we see about hospitality, two other areas we've invested that we continue to like and see growing. One is management of independent or brand franchised hotels. So we have a business called Davidson Hotels, for example. The hotel companies themselves have evolved. They started off as hotel owners like Marriott and Hilton and so forth. First, they were hotel owners, then they were managing hotels for third parties. Then they really became franchisors. They have wonderfully powerful loyalty programs, a lot of systems and purchasing programs and group sales and things you can participate in. But they're really branded loyalty programs in many ways. And so we've seen a gradual shift away from hotel management to hotel franchising. Now it's been probably a net positive, frankly, for the hotel management companies or the Marriott's and the Hiltons because they've grown exponentially over the last couple of decades.”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“Hotels today are going through an incredible rebound coming out of COVID. Travel was the epicenter of impact from COVID. Hotel opened its doors a hundred years ago, and basically has been designed to be open every day since for most hotels. Most hotels closed during COVID. It was really truly remarkable. So coming out, you're seeing this revenge travel start to normalize a bit now. But not all hotels are equal, so we're still looking at opportunities for hotels that haven't yet come back, that maybe are being impacted because interest rates are 10% and they have problems with their debt stack, and that creates a catalyst for opportunity. Yet we have confidence that the travel ultimately to those hotels will come back. Maybe that's because they're more corporate focused. Maybe that's because they have more international travel. Maybe they're located in a part of the world that hasn't opened as recently. And so we're pretty interested in those types of hotels that have underappreciated upside, yet a near-term catalyst for”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“You go into the resort world? Perhaps thirty percent, forty percent of the revenue is coming from the hotel room rate. All the other revenue comes from everything else, the restaurant, the spa, the retail, activities, and other amenities that they sell. If you don't really understand the complicated rule set of running a retail shop versus running a hotel, running a restaurant versus running a golf course, running a spa versus running a health club, then what can be a 30% margin business can rapidly become a zero percent margin business? And if you take a one size fits all approach to owning a hotel, you will dramatically underperform when it comes to the resort segment.”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“Think of people who use too much leverage. Leverage is the enemy of liquidity. And liquidity is where value comes from. And so I would say that's the most common thing is the reality is if you over leverage an asset, especially urban hotels, and we don't do as many of those, but urban hotels are cyclical because a lot of their business comes from corporations. Corporations have hard times and they say cut costs. Cut costs means cut travel. That doesn't apply to your family vacation nearly the same way it applies to your job. And because of that, as soon as the CEO of JP Morgan, Jamie Diamond says cutback say on travel, JP Morgan bankers won't travel. And if you're a hotel that has a lot of that demand, you're going to see cyclicality. If the owner of that hotel use too much leverage, guess what? They have a problem. I say that's the most common thing. The other thing I would say is all the ancillary businesses around a hotel. Someone who tends to look at urban hotels, 80% plus of the revenue, maybe even 90% is coming from the hotel.”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“For that. So I think what we find is sometimes we see the reach, sometimes we see smaller real estate funds, sometimes it's high net worth investors, sometimes it's a strategic already in the space, sometimes it's a large private equity firm, but it's usually not all those people. It's a subset of that on any given deal. And one of the things that we feel really proud of is because we've been in this sector and no other sector for 30 years to an institutional investor, we're a financial firm. To the industry, we're really a strategic player, no different than a public company that's been investing the Marriott, say, in the hospitality space, who we greatly admire. So what that gives us is the ability, I think, to be a preferred partner. And that leads to off-market or proprietary deal flow, which at one point I thought was really an overused term. As we've grown and been in the space and gone through cycle after cycle now over this time period, I've realized it's actually not. And we've gone from about one-third of our deal flow being proprietary to now.”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's consistently inconsistent. But there's no one other firm that looks just like us. And we have great admiration and respect for many of the private equity firms that are out there. If you are a Blackstone and you're looking at a large multi-billion dollar deal, my guess is they could predict that KKR or Apollo or Bane or Carlisle are looking at that same deal at some level. We don't have someone of that nature. There's three travel and leisure firms and they're all going to look at every deal. I would say that on the larger transactions, we do tend to see a blackstone, sometimes a start with capital. On the smaller transactions, and a lot of what we do by identifying these themes and creating these platforms is we end up deploying capital on a lower average check because we add 30 select service hotels that we've bought at X dollars a clip to aggregate to a pretty big number, but individually they're 20 or 30 million dollar checks. You have a different competitive”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“Joey, you have third pound burgers in the freezer. Yep, yeah, we do. What's wrong with that, boss? Well, on your menu here, you sell quarter pound burgers. Why do you got third pound burgers? And coming out of that, what Michael he said was inspect what you expect. Getting into the weeds like that, I think some could certainly say it's overly micromanagement. It set a tone culturally for those details mattered. Getting the details right is something which we really pride ourselves on. Now, we don't do the freezer tours as much as we do, as much as we used to, but I hope our teams are on their own way.”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“We're sometimes operationally detailed to a fault because all we do is this. We used to do these things called freezer tours. And it's actually an old Mike Shannon story, but we were touring a golf club. I think it was in Florida. And Joey Garon, our general manager, they're a wonderful guy when it was talented guys who ever worked with in the space. He was taking us on this tour. And we didn't inevitably go in the freezers of the kitchens and started looking around. And you learn a lot by going through the back of house, how clean is it, how organizes it. In going through that, What we noticed was there were a third of a pound hamburger patties and there were lobster tail in the freezer. So we get done with the tour and Mike says, Joey. And Joey's like, yeah, boss. He had this thick southern accent. Yeah, boss, what do you need? Joey. Great tour. Only two problems. I asked you about. Yeah, yeah. What do you need, boss? Well, there's lobster in the freezer. Yeah, yeah. You don't have lobster on your menu. Oh and then.”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“Hotel, and then you have restaurants, and then you have a club membership and real estate. So there's different businesses that all have to come together. There are, and it's hard. So we try to do a couple of things. One is bring the other people of diverse backgrounds, both in the conventional sense that we talk about today, but also in the sense of who brings hospitality expertise, who brings restaurant expertise, who brings real estate development expertise, who brings marketing expertise, and bring those people together and have that melting pot of ideas and stimulation that comes from that. The people side of all these businesses is hard. But I think that's something which we've come to appreciate over 30 plus years of doing this. We have about 15 or 20 different of these vertically integrated platforms, each one of which has a really dedicated, wonderful management team. We try to complement that with our own team. We call it the strategic operating team at KSL Capital Partners, who are really working hand in glove with each of those individuals.”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“And in doing that, we had the opportunity to launch what we thought could be an equally exciting, if not even perhaps better consumer option, which we ultimately named the Icon Pass. And we had the idea of basically taking what were then, I think, 15 or 16 ski resorts that we had owned that we bought through five or six different transactions, merge them together, and started with that core nucleus. And from there, we partnered with another 35 ski resorts or so to create the icon pass. So you had access not just to our own resorts, but to this wonderful network of global resorts, world-class destinations from Aspen to Zermot, Switzerland. And that was game changing. So that was the opportunity we saw. And then we were able to bring together five or six investments around that theme, build out a world-class management team to then go after and tackle that opportunity. When you talk about the vertical integration of something could be Alterra, another one of these investments, what does your team look like to have the specialization?”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“Operating capability. So build out a management team that can again go and execute and replicate. An example that would be in the ski business. One of the things that we did in the late 90s in Vale was we were fast followers on creating basically a discounted season pass for skiers. This is now fairly common, but at the time it wasn't, small place called Bogus Basin in Idaho that had cut their prices on season passes by like 80% and sold a zillion of them, et cetera, et cetera. We followed that trend. We charged 200 bucks. I think it was that first year and you could ski as much as you want at Keystone in Breckenridge. And that was in 1998 and had great success. Vale Resorts was far more successful doing this after I left, but they were doing incredibly well with this. They identified and expanded on that product ultimately calling it the Epic Bass. We saw that being an opportunity, but we didn't have the critical mass of resorts to really create a competitor. And then in 2017, we had the opportunity through a series of transactions to create Altera Mountain Company.”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“We don't need to have a fancy back of house, but we need to have really appropriate amenities, the pool, the spa, the gym, restaurants, and so forth. But at the same time, just because you're not going to overinvest in the back of house doesn't mean that you don't want to be investing in your people. It just means that you want to justifiably put the higher visual impact capital into the guest facing areas. I think our teams do a great job of balancing. How do we make sure we're taking care of our guests? And how do we still make sure we're taking care of our people? Just the definition of how we do that is a little bit different. When you're looking at investment opportunities, what are the different types of investments that hit your sweet spot in terms of a potential target? We love to invest thematically. So identify a theme that we believe has legs, and then we like to vertically integrate so we can own both the real estate associated with that theme as well as an opportunity.”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“bought that membership, and this became their safe haven. This is where they and their families went to make memories. And that was a need that no one saw in the local community. They weren't clamoring for this. The hotel guest wasn't clamoring for it. But once we built it, they came. And so that's a big part of what we try to do from a consumer perspective is always think about what's coming next. How can we innovate? How can we really execute at a superior level? And if we do that right and provide great service, creating value for investors, that tends to happen. With your history and culture of, let's say, being frugal, your old corporate headquarters, how do you think about the balance between keeping costs down at your properties and making sure you have the valuable experience for the customers? It's really important to distinguish between what drives the customer experience and what's just cost for cost sake.”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“Resort, we spent many millions of dollars turning what was an old show lounge at the rat pack used to come and perform at into a ten thousand square foot beautiful health club that overlooked the golf course. At the time, the health club was in the basement with no view. We had a 10,000 square foot health club for our hotel at La Costa. We then spent probably $3 or $4 million, which at the time was a lot for pools, and we created a zero entry beach pool for kids. We had a couple water slides or for teens. We had multiple pools for adults. And then, as we describe it, we turned the resort inside out. Not only do we make that available to the hotel guests who didn't realize you could have that type of experience in a resort environment, but we also then sold a membership to the local community who didn't realize that they could actually access the local hotel for all these types of amenities. It basically was a country club for the local community. We had a golf course too, so you could buy a traditional country club membership, but really it was a country club without the golf. And over a thousand local families.”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“Employees, or more to deliver on an experience that for thousands of guests that are in the hotel, perhaps at any given point in time. It's a matter of really understanding consumer desires, both what they desire today. We know consumers are more demanding of, say, health clubs and gym access when they're in a resort. We know that they're more discerning when it comes to restaurants, food and beverage. What do they eat? How do they eat? When do they eat? Where do they eat? We know they want more activities and amenities. But we also have to think about the things that they don't yet know they need. In that, we're talking about resorts. So when they get there, they're like, wow, that's phenomenal. So give you an example. Going back in time, we bought La Costa Resort in the early two thousands. And this was still a time when consumers weren't thinking about health and wellness as a vacation priority in the way they are today. We saw that as being something that was coming and something we thought we could distinguish ourselves by overemphasizing. So when we bought that.”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“And that's good for travel and leisure. So we think that's a good secular tailwind. The same time you have Now, all of a sudden, living in a world of 10% interest rates again. And so for us, what that means is we think there's a really unique opportunity to combine lower entry points for pricing because higher interest rates mean you can't pay as much for something today, yet still have this long-term very favorable consumer outlook. So to us, it's a really good time to be able to find unique opportunity across the spectrum, from hotels to ski resorts or golf courses, we see opportunity in all those areas. Right now, things are a little slow though because of interest rates. How do you think about making the experience for the consumer special in the properties of businesses that you own? To us, it's several fold. When a consumer goes on vacation, they're looking for freedom, escape, romance, whatever it might be. And we need to make sure that we can deliver on that. And that's complicated because you have a large resort hotel, you have a thousand.”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“Risk and reward it gets tilted by what's your entry point and what is your outlook for the market. So when you're in an environment like today, we think differently about risk reward in the sense that interest rates are higher. There's a lot of macro uncertainty out there, yet the long-term trends towards travel and leisure are very favorable. We were in the middle of a multi-decade shift of the economy to going from more of a goods-based economy to more of an experiences-based economy. And so that provides a tailwind because we tend to focus on the leisure part of the travel business less so the corporate travel or the urban hotel. We do some of that opportunistically, but we're primarily leisure focused, about 90%. And so that economic shift, that psychographic shift that people want, they want to do more things with people as opposed to buy more things. They want to post on Instagram ironically more about that mountain they climbed than that handbag or car they bought.”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“Whatever it might be, dirt is clubs. So think of any type of membership club where you pay a dues stream, an initiation fee, and then pay a due stream to then utilize it. So it could be a health club, a golf club, a private dining club, some type of social club. Then there's second home real estate. So we do single family homes, condominiums, fractional, whatever type of second home development it might be. And then there's travel services, service-related businesses serving the businesses or the consumers of the other four segments. That could be a tour operator or a wholesaler, an event company, an FBO in the private aviation space. So that's how we define it. And the opportunity set itself is really quite large. About half of our deals, a little bit more, end up being hotel related. The other half tend to be split across all those other segments. As you walk through each of those five, how do you think about the risk-reward opportunity of each of them?”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“Community affordable housing, all of these things, aviation at the airport, Central Reservations to do the booking of all these destinations, that's really how we have success is how do you complicate an otherwise simple business and in doing so generate unique consumer experience, a unique employee experience, a unique community asset, and ultimately attractive financial returns for our investors. I'd love to walk through some of how you do that and break down the steps because there's a lot of businesses to walk through and a lot of complexities in each. Maybe the place to start is what your universe of investment opportunity is. The way that we describe travel and leisure is having five primary sectors, hospitality, which would be hotels and restaurants, both the physical assets as well as the hotel management companies, recreation, anything that we do we all do to recreate could be ski, golf, spa, go to a theme park, gaming, cruise.”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“Of the economy since 1960, travel and leisure spending in the U.S. has grown by about 7% per year, more than double that of GDP. It's projected to grow more than double that of GDP if you look out over the next decade. So to us, it's this large and growing sector of the global economy, but it's one that's underinvested in because it's complicated. I think at some level, people don't know whether it's fish or fowl. Is it real estate? And I take a more passive approach to it, or is it private equity, but it has this real estate. To some that's confusing to us, that's opportunity. We're one of the only groups that focuses on it at scale. I think we're the largest private investor in travel and leisure businesses in the world. We're able to differentiate ourselves through the operational perspective we bring having actually operated businesses in this space, going back to the early 90s, really, whether it's ski, golf, health clubs, restaurants, retail stores, every form of hotel, every form of real estate development within a resort second home.”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source
“It by our core values people respect integrity, collaboration, and performance. And the first four really lead to the last performance. We try to be authentic, collegial, not have sharp elbows. We have a New York office now, but we're a Denver-based firm. There's not a lot of Denver-based private equity firms. We consciously wanted to be in the middle of the country, and we like the family value, the value set that you think of from being not in the traditional big city, highly competitive environment, work as competitive as the next person, but we try to do it with probably a little softer edge, I think, than others. When you started KSL capital partners, how do you describe the investment opportunity set in travel leisure? This is one of the largest sectors of the global economy, the third largest sector of the global economy. It's about 11% of global GDP and employment, both. It's one of the fastest growing sectors.”
2023-06-19 · Capital Allocators · Eric Resnick – Ski, Golf, and Vacation Investing at KSL (EP.322) · IDENTIFIED FROM THE TRANSCRIPT · source