In my narrow world, we’ve seen evidence of stability. Today, we got some confirmation in two areas where I would’ve least expected it: lodging and Las Vegas. It wasn’t exactly a “business is booming” call to arms, but Starwood Hotels indicated at an investment conference that “the change in the rate of change has stabilized”. You know it’s a bad stock market environment when a positive 2nd derivative becomes an investable delta. The other surprise of the day was the RevPAR data provided by Sheldon Adelson. February occupancy and rate at their Las Vegas properties were 93% and $225, respectively, much higher than the Street was expecting for Q1. Moreover, March is a stronger seasonal month.
We do acknowledge that these are the first positive data points we’ve garnered on either general lodging or Las Vegas. However, we have been making the case for stability in other areas of leisure. We’ve been highlighting the sequentially improving regional gaming markets (see “REGIONALLY SPEAKING, BUSINESS AIN’T THAT BAD” from 2/18/09). PNK posted terrific earnings and the rest of the regional guys were better than bad. In our 2/26/09 note, “CRUISING TOWARDS STABILITY”, we discussed better Jan/Feb bookings.
In any other market, I probably wouldn’t be highlighting “less bad” as an investable theme. However, given the valuations on leisure stocks, rock bottom expectations, high short interest, and Keith’s near-term positive view on the market, any signs of stability are important.