Room to raise the ceiling: management says its own prices, rates, or terms sit below what the market would currently bea
The model's full reasoning — Q2 2023 call → NOWe need to determine if management conveys that the company is currently charging less than the market would bear, and that they are actively closing that gap. The transcript is about Delta Air Lines. We need to look for any statements about pricing, fares, revenue, etc. Management talks about strong demand, premium revenue growth, but do they say they are undercharging? They mention "premium revenue grew 25%", "total unit revenues were up 1.3%", "yield and load factor" improvements. But is there any explicit statement that they are raising prices because they were below value? They talk about "pricing power" maybe? Let's scan. Ed Bastian: "the industry backdrop remains constructive. Air travel demand is strong and the consumer is in good financial shape, particularly the premium consumer base that we target." No mention of undercharging. Glen Hauenstein: "Consumer demand strength continues to be the primary driver of our revenue growth." "Premium revenue grew 25%, supporting growth in unit revenues and continuing to outperform main cabin." "Delta Premium Select is now offered on over 80% of our wide-body fleet and customer response to the product has been terrific with returns outpacing our expectations." That suggests they are getting good returns, but not that they were undercharging and now closing gap. They talk about "total revenue to be similar to 2Q, increasing 11% to 14% year-over-year." "unit revenues are expected to be 2% to 4% lower." That's a deceleration, not a price increase. Dan Janki talks about costs, fuel, etc. No mention of "we are raising prices" or "we have been undercharging" or "we are now capturing more value." The only thing close is "returns outpacing our expectations" for Premium Select, but that's about product performance, not about a gap between price and value. Also, the question asks: "management conveys that the company is currently charging LESS for what it sells than the market would presently bear — that its own prices, rates, fees, or terms sit meaningfully below the value customers are getting or below what the current market would support — AND that the company has already begun, or is now actively beginning, to close that gap while customers stay?" There is no such statement. They talk about strong demand, but not about undercharging. They talk about revenue growth, but that could be from volume, not price.
| Ticker | Company | Call | Date | Call grade |
|---|---|---|---|---|
| MEC | Mayville Engineering Company, Inc. | Q3 2022 | 2022-11-05 | B+ |
| CAG | Conagra Brands, Inc. | Q2 2017 | 2016-12-22 | C+ |
| SOHO | Sotherly Hotels Inc. | Q3 2016 | 2016-11-08 | D |
| RCL | Royal Caribbean Cruises Ltd. | Q1 2016 | 2016-04-29 | C+ |
| HPP | Hudson Pacific Properties, Inc. | Q4 2015 | 2016-02-25 | C |
HPP · Q4 2015 → YESThe question is: Does management convey that the company is currently charging LESS for what it sells than the market would presently bear — that its own prices, rates, fees, or terms sit meaningfully...YES The transcript shows management explicitly describing a gap between its current charges and what the market now supports, then confirming that the company is already closing it through mark-to-market resets and higher new/renewal rents. Victor Coleman states that the company has “rolled out 80% plus mark to market” on recent leases 2.5 years old, and that cash rent spreads on 1.6 million square feet executed since the acquisition were “north of 30%” with “20%, 25% mark-to-market for 2016 and 2017.
MEC · Q3 2022 → YESThe question is: Does management convey that the company is currently charging LESS for what it sells than the market would presently bear — that its own prices sit meaningfully below the value custom...YES Management explicitly states that they have taken pricing actions in 2022 and have "more room for margin expansion through continued value pricing even beyond the pricing actions taken during 2022." This conveys that their current prices sit below what the market would support, and they are actively beginning to close that gap with further value pricing.
SOHO · Q3 2016 → YESThe question is: Does management convey that the company is currently charging LESS for what it sells than the market would presently bear — that its own prices, rates, fees, or terms sit meaningfully...YES The transcript shows management explicitly identifying a rate gap at the Laurel hotel (and similar situations at other properties) where current charges sit below the competitive set/market, while describing active steps already underway to close that gap through continued ramp-up and occupancy/rate improvements.