Goldman Sachs CEO talks economy with Hilton’s Nassetta
Goldman Sachs CEO talks economy with Hilton’s Nassetta
04 FEBRUARY 2019 9:31 AM

Hilton’s Chris Nassetta interviewed Goldman Sachs’ new chairman and CEO, David Solomon, at the Americas Lodging Investment Summit about his role as leader, the world economy and why the company lets its employees stay at Airbnb rentals.

LOS ANGELES—Hoteliers attending the opening sessions of the Americas Lodging Investment Summit had a peek into the life and thoughts of Goldman Sachs’ new chairman and CEO, David Solomon.

During the “CEO Exchange—ALIS welcomes Goldman Sachs” session, Hilton President and CEO Chris Nassetta interviewed Solomon to help kick off the conference. Solomon, who has held several positions at Goldman Sachs after joining as a partner in 1999, said becoming a CEO even after years with the company has required a transition process and, at times, has been a bit isolating. Company leaders are not defined by the things that go well, he said, but by how they handle the different challenges that arise.

Culture matters an enormous amount in all organizations, he said, and in a company like Goldman Sachs, there is a lot of culture deeply embedded into the organization. As the leader of an organization, he said, he has to decide what it stands for. It’s the leader’s job to look at the compass and make sure the company is pointing north as much as possible.

While the needle may bounce back and forth a little, Solomon said that as the leader, “your job is to figure out how to make sure you keep knocking the compass in the direction.”

Leading by example is a necessity, he said, and to make a cultural shift requires a lot of repetition in words and actions.

“When you think you can’t say it any louder or do it any more, you’re just starting to impact it,” he said.

The economy
Given that Solomon had recently returned from the World Economic Forum in Davos, Switzerland, Nassetta asked him what he considered to be the key themes at this year’s conference.

It’s the beginning of the year-over-year comparisons, Solomon said, and people generally are trying to assess what this year will be like. The tone tipped a bit more negative this time, he said, as attendees expressed more concerns than positivity.

However, whatever the consensus is each year, it’s generally wrong, he said, and people sometimes work themselves up into a bit of groupthink. The economic growth trajectory is slowing down a bit, but it’s still growing. Goldman Sachs projects the global economy will grow by 3.5% this year and the U.S. economy will grow by between 2.2% and 2.4%.

There are macro problems to solve that won’t be fixed quickly, Solomon said, citing the recent government shutdown, the U.S. trade war and overall relationship with China, Brexit and the political situation in France.

“The combination of all of this is making people nervous,” he said. “It’s having an impact on global growth, but not one at this point that seems out of control.”

The chance of a recession this year is small, Solomon said, and his company’s research analysts give it a 50% chance of occurring next year. But that means there’s just as much a chance the economic recovery continues through 2020 into 2021. The economy is late in the cycle, he said, but that doesn’t mean it has to end with a “thunk.”

“It could end with a bump,” he said.

Everyone is operating in a global economy, he said. There’s no question China is slowing down, he said. The U.S. economy is in good shape, but it’s not immune to what’s happening broadly and globally.

“You look for the signs, but there are not a lot of signs at the moment in the U.S. that the U.S. isn’t chugging along pretty good,” he said.

When Nassetta mentioned a Hilton investor who was worried the U.S. would talk itself into a recession, Solomon said there’s no historical precedent about the country worrying itself into a recession. Worry might affect people at the margins and cause them to behave differently, he said, but not everyone overall.

The Federal Reserve is going through a process of normalizing U.S. monetary policy, he said. The country has seen an extraordinary period of intervention, and not it’s unwinding all of that. The pace of interest rate increases will be slower compared to 2018, he said. The consensus is 1.1 rate increases at the back half of the year, but Goldman Sachs is taking a more hawkish view with two increases in the second half of 2019.

The sharing economy
Nassetta pointed out that Goldman Sachs has decided to allow its employees to stay at Airbnb accommodations and asked Solomon for his perspective on it.

One of the reasons behind the decision was because Goldman Sachs has young people who wanted to use Airbnb, Solomon said, and the company has a number of young employees. Oftentimes the company uses Airbnb to handle overflow when employees can’t find a room at standard hotels because of a big event happening in an area. Goldman Sachs’ use of Airbnb is relatively small, he said, and it doesn’t replace the use of hotels.

“Over time, regulatory, business, personal preferences will sort out how this fits into the marketplace,” he said. “But one thing’s for sure: Your industry is not going anywhere. This is not going to change—in my opinion—going to change or displace your business in any way.”

1 Comment

  • Paul Breslin February 4, 2019 5:09 PM Reply

    Bryan, Great job with this article, I was fortunate to be in the room and watch this interview. You did an awesome job to capture the important points and the emotions of same.

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