The transformation of Westlake-based TravelCenters of America Inc. is a focal point for this Wall Street Journal article about truck stops, which the paper says "are emerging as one of the brighter spots for commercial real estate during the pandemic, along with better-known categories like warehouses and life-science buildings."
From the article:
These businesses have been able to profit even as demand for hotels, shopping malls, senior housing and other more-traditional property types has eroded severely.
Truck-stop real estate may be the most niche of all the property types doing relatively well now. The industry started with mom-and-pop operators but consolidated over the past half-century as scale became increasingly important for cutting deals with the country's largest truck fleets. It is now dominated by three companies, including TravelCenters.
The Journal notes that shares of TravelCenters, the largest publicly traded truck stop owner. "are up more than 50% since reporting quarterly results on Aug. 5, which showed a nearly 80% increase in net income over the year-earlier period." It says CEO Jonathan Pertchik, who took the top job late last year, "was tested almost immediately. When the pandemic hit, he accelerated a turnaround strategy of cutting costs and rethinking parts of the company."
Among the steps: TravelCenters shut down most of its 169 full-service restaurants "because they weren't considered essential. That meant furloughing 4,000 workers, but it helped boost the company's net income by 78.3% and earnings before interest, taxes, depreciation and amortization by 24.2%." About half of the full-service restaurants have reopened, the paper reports, but Pertchik "said he is planning big changes to that business, including possibly bringing in outside companies to run it."
The paper says Pertchik also has "overhauled TravelCenters' purchasing procedures. Rather than buying fuel in 30-million-gallon increments, the company's new head of fuel purchasing is now looking to put in an order for 750 million gallons, achieving a bulk discount." And TravelCenters is saving money "by competitively bidding its uniforms for its truck mechanics and saving electricity by converting to LED lighting."
You can go here for a Crain's article from May about TravelCenters' efforts to remake its business.
• Antitrust expert Christopher Sagers, a law professor at Cleveland-Marshall College of Law, is quoted in this Bloomberg profile of Tim Sweeney, the billionaire founder of Epic Games Inc. who has "launched a legal broadside against the biggest app stores in the world with a lawsuit alleging that Apple Inc. and Alphabet Inc.'s Google are a harmful duopoly." Sweeney for the last two years "has been speaking out against Apple and Google for charging developers fees of as much as 30% — versus Epic Games Store's 12%," the news service says. "Now Sweeney is trying to take on the companies in court for removing Epic's Fortnite app after it tried to bypass their fees." It notes that he "can afford to throw a lot of resources into the fight," as Epic "recently raised $1.78 billion in funding, including $250 million from Sony Corp., at a valuation of $17.3 billion." Sweeney's legal challenge "may be difficult to win," Bloomberg notes, adding that the judge assigned to the suit sided with Apple in a similar antitrust case seven years ago. Still, Sagers says there's a chance: "The legal argument is very plausible, and the facts are strong for the plaintiff, and the plaintiff has an extraordinary legal team, and they are willing to put extraordinary resources into this. I'd give them 40% to 50% odds of winning." Sweeney's legal team includes Christine Varney, who is the only person to have served as both U.S. assistant attorney general for antitrust and as a commissioner of the Federal Trade Commission.
• Richmond Heights-based Flexjet is part of this Barron's article about programs being launched by private jet companies to attract flyers who are wary of commercial flights. Barron's says that flying via private jet, typically reserved for "the uber wealthy," now is "becoming more accessible with flexible rental options, smaller midsize planes, and other options. And travelers who routinely indulged via first-class commercial tickets are now heavily weighing private alternatives because of COVID-19." Flexjet launched an initiative to make private flyers more comfortable by announcing that its pilots and crew would no longer fly commercial to flight assignment destinations, and would instead travel on the company's own planes. "Given the threat posed by the novel coronavirus, we felt it was in the best interests of our owners and flight crews to take this risk out of the equation," said Flexjet chairman Kenn Ricci. Flexjet chief operating officer Megan Wolf tells Barron's that the company's typical customer is still "ultra-high-net-worth individuals from all walks of life." What's changed, she said, is those customers' motivation in flying private. "Now," she said, 'they are trying to avoid crowds to reduce their potential exposure to the coronavirus, on top of all the other benefits to flying private, such as time savings and the ability to reach more airports directly."
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August 26, 2020 at 11:10PM
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The truck stop business is on a roll, helping smooth the reorganization path of Westlake-based TravelCenters of America - Crain's Cleveland Business
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