All posts by Keith Thompson

Smoke and Mirrors

Career

The term smoke and mirrors mean, that something looks different than it actually is. The smoke part means it is kind of hazy and you can’t quite see it clearly and the mirrors part, means if you use multiple mirrors, it can make something look much larger or smaller than it is. The dictionary meaning says “the obscuring or embellishing of the truth of a situation with misleading or irrelevant information.” The term was first used in reference to the Watergate scandal in 1975.

In my humble opinion, that is what is happening with many of the publicly traded stocks today and especially the lodging stocks. The COVID crisis started in early March of 2020 so when the companies report their earnings for the first quarter, it may look somewhat down but still not as dire as one may think. That’s because reports for the first quarter will still average in January and February to counter act the March performance. So, investor interest is pumping up the lodging stocks as we read this, but no one is thinking ahead to the second quarter earnings report. That report will really show what impact the COVID virus has had on the lodging companies.

Income in the publicly traded world is defined as the net operating income (“NOI”). Meaning it is the amount of profit after all the expenses except debt. It is not about the top line sales revenue, but the focal point is the NOI. When I tell you that these lodging companies will have no NOI for the second quarter, it makes it sound like just a blip on the screen. It is worse than that. It’s not that they will have no income, it is the negative NOI caused by having to pump in new money just to keep the doors open. The average hotel today is losing around 100-200k a month just in operational expenses. The big hotels on the Vegas strip are losing 10’s of millions a month. The full effect will become evident after the second quarter earnings reports are out.

Far be it from me as a little hotel broker to predict the future, but I believe once the real (2nd quarter) effect of COVID is discovered, it will affect hospitality, retail, office, multifamily and residential stocks. Hopefully we will all get through this but possibly what lies on the other side of this pandemic, could look financially very different than it used to. KT

Jack Ward

Career, Life

Jack Ward passed away this week after a long illness and he was one of my most dear mentors in business and in life. He was one of the founding partners of HodgesWardElliott, an Atlanta based hotel brokerage firm that gave me the opportunity 30 years ago to sell hotels.

There are not enough words to really express the impact Jack had on my life. He took a very inexperienced young man and wrapped his arm around me and taught me the business. At the height of my personal financial crisis (restaurants) in the early 90’s, Jack personally loaned me the money to keep the business afloat long enough to get out.

He was the glue that held the company together and his door was always open for any of us brokers to get his council. I remember his desk was always full of projects, but when I stopped by to talk to him, he would always look up from his desk and give me as much time as I needed. What a leader and what a man that put the needs of his people above his own personal needs.

I will remember Jack for the rest of my life and will always strive to emulate the example he set. KT

Call me silly

Life

This morning I got in my truck heading to the office for week six of the, work-from-home situation relative to the COVID-19 virus.

My radio options were many including every news outlet, financial news outlets and many music options. I was thumbing through my phone and clicked on Vince Gill singing, “It came upon a midnight clear” Christmas song. I said, “what the heck, let’s play it.” Vince cuts down on that song with that high tenor voice singing one of the all-time classics. I wouldn’t admit this out loud, (although, I guess I am) but I listened to it three times. Ha

It was once said that soldiers in battle were dreamers. When the guns start, they dreamed of warm firelit homes, Christmas carols and their wives.

We live in a great country. In times of stress like the quote about the soldiers above, sometimes you just need to listen to a Christmas song to lighten your spirits. KT

Difference between how and why

Career

Someone once said, that the person that knows how, will always have a job, but he will always work for the person that knows why.

I believe every business must have the how and the why to succeed over time. One without the other will most likely not stand the test of time. There are probably thousands of companies that fail because it was started by the person who knew how but never could grasp the why. There must be a greater reason than just money. People need to have something they believe in.

History is full of companies that have lasted for decades because they were able to get people to believe in what they were doing. Many of the tech companies today exist because early on they issued stock instead of big salaries which caused people to take ownership in the company (the why) and then developed how to do it.

When you talk to a home depot employee in the light bulb section, the reason they want to take care of the customer is because most of them probably own stock in the company. When you go to the drive through at a Chick-fil-A, the reason the service is the best in the industry is because each of those young people work for company that gives a lot of money to helping others. They understand the why.

Whatever your job is and whoever you work for, try to find the why. KT

Only what is required

Career, Life

There are two kinds of people. Probably more,,,,, but I only want to talk about these two. There are people that are driven and entrepreneurial and then there are the people I call, 9-to-5’ers. They are both good type people you enjoy being around and for the most part, are trustworthy and reliable.

The driven person is one who thinks for him or herself and doesn’t have to ask about every detail along the way. They are driven and think out of the box and work when it may not be expected and probably won’t be noticed. They don’t seek the recognition. They are people that don’t need constant confirmation from co-workers and leaders. They just go do the job the very best they can and don’t keep a record of how long it takes. They are simply the same type people all our grand-parents and great-grand parents were. Mine were all farmers and they didn’t go to the house at 5 o’clock. They worked many times 12-14 hours a day. They didn’t even own a watch except maybe the one they carried in their pocket on Sunday.

Now let’s talk about the 9-to-5’ers. I am talking about employees, not business owners. They don’t do one single thing that they are not paid for. They never work beyond the 5 o’clock quitting time. You tell them do something and they are happy to do it provided it does not require them to think out of the box and God forbid, do a little more than was asked of them. 9-to-5’ers are generally good reliable people but if you employ one of them you better make sure you understand what you are getting. You will get what you asked for but nothing more. A 9-to-5’er will be neck deep in a project that may take only another hour to complete but at 5 o’clock sharp, they stop work.

In this Post-COVID marketplace we see today, you quickly find out the kind of people you want to surround yourself with. It doesn’t take a PhD in business to understand that if you had to lay someone off, the first ones out the door are the 9-to-5’ers. KT