TRAVEL

Hello Travel My Old Friend

Travel is light years away from pre-pandemic levels, but it is slowly creeping back. Here's the latest: 

1. Planes

Tom Hanks finally has some company—U.S. airports are the busiest they've been in five months. 

Yesterday, TSA said it screened nearly 832,000 people at airport checkpoints on Sunday, the first time screenings have topped 800k since March 17. Air passenger levels remain around 70% lower than a year ago, however.

• Airline execs have become full-time C-SPAN viewers. If Congress ever passes another COVID-19 relief bill, it could include more bailout funds for the industry.

Trend watching: TSA said it's finding guns in passenger carry-ons at 3x the pace it was at this time last year. And 80% of those guns were loaded.

2. Hotels

"We see folks are increasingly willing to step out and travel," Marriott CEO Arne Sorenson said during his company's Q2 earnings report, aka "the worst quarter we have ever seen by far." 

But by definition "worst" means "can only get better." 91% of Marriott's global properties are now open, with Greater China leading the charge. Sorenson said that region's success is an example of what can happen if places successfully control the spread of the virus. 

Trend watching: In terms of pace of recovery, leisure travel > corporate travel, Sorenson said.

3. Cruises

They say be your own best advocate, and Royal Caribbean execs are a shining example. CEO Richard Fain said the company was "humbled and surprised" with 2021 bookings despite "literally no marketing efforts." He said people were frustrated with staying at home and desperately wanted a vacation.

• The entire cruise industry has effectively been shut down since the pandemic gained steam in March. Royal Caribbean was forced to cancel more than 1,500 sailings and booked a $1.3 billion loss last quarter.

Trend watching: Expect Royal Caribbean cruises to begin in Australia and China first, potentially before November. It all depends on the trajectory of the virus. 

LEGAL

Sex, Lies, and a Side of Fries

In November of 2019, McDonald’s fired then CEO Steve Easterbrook for sexting with a subordinate, a relationship deemed consensual but inappropriate. The company quietly moved on and that seemed to be the end of it.

Narrator: It wasn’t

Yesterday, McDonald’s capped off a subsequent investigation and brought a lawsuit against Easterbrook, accusing him of lying to the board of directors about the extent of his relationships with employees. 

• The kicker: The company is trying to recover $40 million from Easterbrook—about the amount of his exit package.  

Easterbrook, who launched all-day breakfast and helped double McDonald’s share price during his time as CEO, is also alleged to have given an employee he was having a relationship with generous stock options.

Bottom line: It’s not often you see a scandal like this play out in public, but McDonald’s has chosen to face Easterbrook’s alleged transgressions head-on. The company is facing lots of other accusations of sexual harassment at the workplace—those it may try to keep out of the spotlight. 

RETAIL

Auntie Anne’s Might Be Getting a New Neighbor

Yesterday, the country’s largest mall landlord Simon Property Group reported earnings. You know what’s next. 

Revenue declined 24% to $1.1 billion. To put some of the punches in perspective...

• Rent: Simon collected 51% of the rent it was due in April and May in the U.S. Rent payments rebounded to ~70% in June and July.
• COVID-19 closures: Simon’s U.S. retail properties lost a total 10,500 shopping days in Q2. 

Simon’s been steadily reopening locations since lockdowns eased in May. As of Friday, 91% of its U.S. tenants were open and operating.

That’s not what got investors excited 

Sunday, the WSJ reported Simon is in talks with Amazon to turn some mall properties occupied by struggling retailers like JCPenney and Sears into fulfillment centers. Why does that make sense?

• Simon gets a reliable tenant that definitely has money to make rent.
• Amazon gets more distribution centers across America to make good on its lightning-quick delivery promises.

Big picture: The collapse of brick-and-mortar shopping chains was called the “retail apocalypse” before COVID-19 hit. Mall owners have to get creative to stay alive, and e-commerce might be the answer.

+ For more retail news and analysis...sign up for the fantastic Retail Brew. 

SPONSORED BY MASTERWORKS

Think Big

What’s the most valuable asset in the world?

Gold? Nope. Tesla stock? Not until you-know-who stops tweeting. A penthouse overlooking Central Park? Close, but no cigar.

It’s art. When a single painting can (quite literally) sell for hundreds of millions of dollars, it’s no wonder that art is one of the most sought-after asset classes for improving portfolio performance (yep, even now).

But the $1.7T art market has two huge problems:

1. Lack of data transparency
2. Incredibly high barrier to entry

So what do you call it when one startup manages to solve both? We call it a great freaking opportunity. 

Meet Masterworks, the exclusive platform that lets you buy shares of great works by Kaws, Banksy, and more. The brainchild of serial tech entrepreneurs (who also happen to be top-100 art collectors), they make investing easier than getting upvotes on /r/wallstreetbets.

Run, don’t walk: Brew readers can skip the waitlist.*

*See their important disclaimer here.

GAMING

Billionaire Barry Bets on Better Betting

While everyone was busy gambling on Ukrainian ping pong and Hertz stock, billionaire media mogul Barry Diller's IAC group was lining up a bet...on betting. Yesterday, IAC revealed a 12% stake in casino operator MGM Resorts worth an estimated $1 billion.

To Diller, MGM = Disney

In a letter to investors, Diller compared MGM—which operates Vegas casinos like the Bellagio and Mirage—to Disney for its ability to use its "iconic brand and multiple avenues to monetize the same intellectual property." 

One monetization avenue that most interests IAC is MGM's inroads in online gaming, which includes sports betting platform BetMGM. 

• It's only live in seven states so far due to restrictions on gambling, but Diller thinks that the regulatory environment will "generally catch up with consumer demand," putting IAC in a position to profit when it does. 

Zoom out: The pandemic crippled the casino business, and revenue at MGM, which operates more than 35% of rooms on the Vegas strip, fell 91% in Q2. But if IAC's hunch is correct, there's a path to recovery for gaming companies—and it's through diversifying physical assets with more online offerings.

TRANSPORTATION

Mask vs. Phone Not a Fair Fight

The country's largest public transit authority, New York City’s MTA, has a problem: Riders are taking off their masks to unlock their iPhones. 

In a letter obtained by the AP, MTA Chairman Patrick Foye asked Apple CEO Tim Cook to put plans for a stroopwafel emoji on the backburner and please find a simpler way for masked iPhone users to unlock their devices. 

Apple spent years turning people's faces into a digital key, but now that feature is a public health risk. In May, Apple released a software update that lets users enter their passcode immediately if Face ID detects a mask. But Foye says riders are still breaking mask requirements to unlock their phones.

Zoom out: MTA ridership, which plummeted 90% when the pandemic started, has ticked back up to 20% of pre-pandemic levels. Early data out of Europe and Asia suggests public transportation isn't linked to notable superspreader events and is safer than people think. 

+ If you're having trouble unlocking your phone in public, you can always try these.

WHAT ELSE IS BREWING

• Uber and Lyft must classify their drivers as employees (and not independent contractors), following a preliminary injunction by a California judge yesterday. 
• Chicago restricted access to some downtown areas and beefed up police presence after widespread looting of businesses early Monday. The looting was apparently incited by a police-involved shooting on Sunday.
• The Big 10 conference will cancel its football season this fall, the Detroit Free Press reports. President Trump tweeted "Play College Football!" in an apparent reference to the report. 
• Nikola shares jumped 22% after it announced an order for 2,500 of its electric garbage trucks.
• Mark Cuban chatted with the New York Times about all the problems he’d like to solve.

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Word of the day: The answer to almost everything is more email newsletters, especially for vocab. If you want a new word sent to your inbox each day, here's your best bet. 

Tech Tip Tuesday: These were some of our favorite reader submissions...thanks for sending! 

1. Text replacement: “I set the first six letters of my email address to autocorrect to my full email address so I never have to type it all out. I also autocorrect ‘addr’ to my full street address. Ty=thank you, bc=because, def=definitely, etc.”
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TITLE TRIVIA

Today’s quiz is all about unconventional titles given to business and government leaders. We’ll give you the title, and you have to name the entity this person leads. 

1. Postmaster general 
2. Secretary-general
3. Chief of space operations 
4. Dear leader 
5. Head goblin 

TITLE TRIVIA ANSWER

1. Postmaster general = United States Postal Service
2. Secretary-general = United Nations
3. Chief of space operations = United States Space Force
4. Dear Leader = North Korea (used by Kim Jong-il)
5. Head Goblin = Gringotts bank in Harry Potter