Dealmakers dish on tips, tricks and trends in hospitality

Here are highlights from the discussion.

Tony Ryan: Can you talk about the “thematic investing” theory at Blackstone?

Craig Newman: We look across the world, and we’re trying to find things that we think are going to produce good results over the long term or medium term, depending on the investment strategy. But we take advantage of a global platform. With the scale of the portfolio, we certainly see what’s going on trend-wise in different markets. And we can also look and say, well, this played out in a country that has similar fundamentals to Australia, for example. So, let’s go along into that particular sector.

Logistics is an example of retail spending diverting from bricks and mortar to e-commerce. We saw that play out for needing more sheds and warehouses to store goods versus putting them in the stores. So, that was a trigger for us to say, 'Let’s go long on industrial.' We did that around the world, and we continue to hold a massive proportion of our portfolio in logistics assets.

Ryan: What other themes are Blackstone anticipating over the next 3 to 5 years?

Newman: Leisure is definitely a key sector for us. In Australia, we’ve struggled to get a bigger foothold. We want to buy more. It’s challenging, and it is hard to acquire assets… We see Australia as a good travel and leisure market. And I think we’ve seen that around the world.

We like Great Wolf Resorts in the U.S. and Border Leisure in the U.K. We just see this pent-up demand for travel, and it’s playing out. There’s been a move away from consumerism for goods to experience. And that’s where hotels play a big part.

Ryan: Can you talk about the Schwarz Family Co’s unique debt story and eventually finding a partner with Blackstone?

Jerry Schwartz: They became our lenders in the middle of COVID, which is amazing. And that was because I had three banks, not syndicated but working separately. And obviously, what happens in these situations is if something goes wrong, you have the domino effect. So it’s the second time it’s happened to me with the Commonwealth Bank (of Australia). They had given me a hard time, and it affected the two other banks… They said in the middle of COVID, 'I want my money back.' I had about 50 transaction accounts, which makes them a lot of money. And they wanted them all closed… 

I have to admit, having set up the financing during COVID was an amazing situation. I was concerned. You look at it in different ways. Blackstone is very prudent. The lender has to be very careful.

Ryan: Is it better to deal with one bank instead of three?

Schwartz: Obviously one because you want to answer to one person, not three different entities. And what happened in my situation was the two other banks were very accepting of the COVID situation. It was just the one bank which was not. And that made the two others concerned about what they wanted to be.

Ryan: Can you talk about different corporate cultures and doing business in multiple countries

Newman: Our head office now is in New York, which means we have calls at horrible hours of the night. So, there is an adjustment... When you’re in Australia, your head office tends to be where you are. So, you’re much closer to the decision making. That said, Blackstone is a very centralized business. We have one investment committee. So, all decisions come out of that committee…

I would say Blackstone has a very global lens and thinks as you would expect, versus… domestics, which tend to have a very domestic local focus, not to say that’s wrong. I think it’s obvious expertise in markets is very important and local knowledge and relationships… But moving to Blackstone, you realize you are operating in one market as part of a global business.

Serena Lim: [To Newman] I hear you about the calls… What is quite common within the three companies [I’ve worked for that were based in the U.S., U.K. and Singapore], they want to embrace diversity, embrace differences, and embrace disruption, and all three have this sort of sub-mentality as they move forward with growth ambitions. But how it’s manifested in the three companies is very different…

From my personal experience, I think for the U.S., you just have to talk louder. For the U.K. companies, you have to do a bit more socializing. For Singapore, it’s show me the numbers. It’s the data.

Serena Lim

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From my personal experience, I think for the U.S., you just have to talk louder. For the U.K. companies, you have to do a bit more socializing. For Singapore, it’s show me the numbers. It’s the data… I think that’s the underlying principles of the three companies in terms of how you do it, what the whole mindset is, and how you bring that to life.

Ryan: What are some deal tips based on your experience?

Schwartz: Transparency is really important. Speak your mind. Don’t beat around the bush. Be transparent and open. That’s what I found is the best success tool.

Lim: I think a principled approach… Many times you go into new deal-making sessions, and the person you meet socially and the same person you meet at the table have entirely different personas. So, I think it’s this whole notion of being yourself, building trust, and being principled. 

You have to be very clear about knowing where you want to go. And having that clarity in purpose in business ambition is also very critical. And then being able to execute that in a very principled way that’s transparent and builds trust… Active listening is something that I would like to mention as well. Sometimes, too much conversation is happening, and no one is listening.

Newman: It applies at home and work. It’s the art of compromise and understanding what’s important, what you can give and what you can let go. And ultimately, you want to end a transaction where both parties are satisfied with the outcome. There’s a lot to be said by just meeting in the middle on some things.