Releasing the first installment of our new daily product - The Leisure Letter.  The LL will provide context to company/industry/macro news impacting our sector.




  • HLT – F4Q13 earnings, conf call @ 10am
  • ISLE – F3Q14 earnings, conf call @ 11am        

Friday, February 28

  • Nevada Gaming Revenue Report for Jan 2014 released
  • MA slot parlor decision made:  Cordish (Leominster), PENN (Plainville), Raynham Park

Monday, March 3

  • None           

Tuesday, March 4

  • CONEXPO-CON/AGG – Las Vegas thru Friday           

Wednesday, March 5

  • BYD – 4Q13 earnings, after market close, 5pm conf call


MGM - MGM Grand Detroit January revenue of $41.2MM, -8.5% YoY.

Takeaway:  Impacted by weather but Jan still better than Dec’s 11% decline.


WYNN - President of Marketing, Linda Chen, sold 4,600 shares of WYNN at $230 for $1.058MM on Feb 24.  Following the completion of the transaction, the insider now directly owns 100,000 shares of WYNN.

Takeaway:  Over the past month, Linda Chen sold 54,600 shares of WYNN stock at an average price per share of ~$222.  


HLT - HIlton's first Q out of the block was a good one with adjusted EBITDA besting estimates $603 million vs our estimate of $567 million.  Net room growth was greater and debt lower than anticipated - both positives.  While RevPAR guidance was solid and in line, adjusted EBITDA guidance for Q1 and 2014 was tepid.  CapEx guidance was a little higher than anticipated.

Takeaway:  We would take advantage of any weakness associated with the guidance.  CEO Nassetta has a history of conservative guidance and we expect Q1 to be another beat, similar to the HOT school of earnings management. The reality is that the lodging industry is in great shape and is a solid late cycle play. The HLT appeal lies in the development pipeline (#1 in the world), Asia under penetration, and the Blackstone related incentives to keep the stock moving higher. We still prefer HOT because of asset sales and their new found interest in capital returns, but HLT looks desirable on any weakness.


RCL - Azamara Journey damaged in Asia, drydocking planned - Cruise Industry News

According to Azamara, a cable floated up and hit the vessel while sailing into Tokyo, damaging the ship’s propeller and propeller shaft.  The 2000-built ship will require a short emergency drydocking to fix the issue, ending its current voyage early

Takeaway:  ‘Routine’ incident shouldn't have an impact on numbers.


RCL - Cruise Sales Open for Anthem of the Seas – Cruise Critic

Based in the UK for its maiden season, which starts on August 1, 2015. Anthem will be sailing on 3 to 14 night itineraries from Southampton, with the inaugural cruise a 14-night roundtrip Spain and Mediterranean beaches cruise.  Fares start at £1,949 per person for an inside cabin.

Takeaway:  Ship premium will be closely watched later in 2014.


REGENT - Century Casinos announces the introduction of a fleet-wide progressive jackpot on board of all eight vessels of Regent Seven Seas Cruises and Oceania Cruises throughout 2014.  The company believes this is the first such fleet-wide progressive jackpot in the upper premium cruise industry.

Takeaway:  Gaming contributes significantly to onboard spend and bigger jackpots attract more coin in.




New York Catskills Zone -  Several bidders expressed an interest in building casinos in the Catskill Zone.  One team, a partnership of Cordish Companies, Hard Rock and Simon Properties is looking at a site near Woodbury Common Premium Outlets.  The second applicant is Louis Cappelli, who is looking to build a $550MM resort in Monticello, at the former site of the Concord, a borscht belt hotel.   Empire Resorts proposed a $600MM complex also near Monticello.  Finally, Penn National Gaming also indicated the company is reviewing Orange County sites as well.

Takeaway:  An update of interested parties. While a ways off, NY could be part of a new slot cycle in 3-5 years. IGT, BYI, and SGMS still face major headwinds over the next 2 years including limited new slot markets.


Larger jackpots in AC - The New Jersey Division of Gaming Enforcement approved regulations allowing AC casinos to offer wide-area progressive slots linked to casinos in other states, thus creating higher jackpot payouts.  IGT will operate the wide-area progressive system.

Takeaway:   Good development for operators and suppliers but minimal impact near-term


Philadelphia’s 2nd Casino License - five companies desiring to build the second casino in Philly presented their plans to the Pennsylvania Gaming Control Board on Wednesday.  The five applicants include:

  1. A partnership between Cordish Cos and Greenwood Gaming Inc for a $425MM Live! Philadelphia casino in South Philly
  2. Bart Blatstein’s $600MM Provence at Callowhill Street west of North Broad Street.
  3. Penn National Gaming’s $480MM Hollywood Casino at 700 Packer Avenue.
  4. Joseph Procacci’s $428MM Casino Revolution.
  5. Market8 at a price of $500MM located at Eighth & Market Streets.

Takeaway:  No opinion yet on probabilities


Las Vegas – to see more music festivals

  • Pasquale Rotella, Electric Daisy Carnival founder and Insomniac Events CEO, announced that his company will launch Las Vegas editions of its popular Southern California festivals “Beyond Wonderland” and “Nocturnal Wonderland”. 
  • Dates and venues for each festival were not released.  Electric Daily Carnival returns to Las Vegas Motor Speedway for a fourth year from June 20-22, 2014 and the industry-focused EDMbiz Conference and a new dance music awards show will bookend the EDC events. 
  • During 2013, EDC brought in more than $278 million to local economy with more than 345,000 attendees.

Takeaway:  Such events are catalysts for bringing the younger (20s and 30s) generations, who typically are not interested in traditional gambling, to Las Vegas to experience music, dining, and entertainment. It's the right move but we're not sure investors have fully embraced the long-term decline in slot demand as the core customer base shrinks and is replaced by lower margin, non-gaming customers.



Versace sells stake to Blackstone with Macau luxury hotel project in hand The Standard

Versace, which is set to open Palazzo Versace with SJM on the Cotai Strip in 2017, said it had agreed to sell a 20-percent stake to US private equity firm Blackstone Group in a deal that values the group at 1 billion euros.



Hedgeye remains negative on consumer spending and believes in more inflation.  Following  a great call on rising housing prices, the Hedgeye Macro/Financials team is turning decidedly less positive. 

Takeaway:  We’ve found housing prices to be the single most significant factor in driving gaming revenues over the past 20 years in virtually all gaming markets across the US.

Did the US Economy Just “Collapse”? "Worst Personal Spending Since 2009"?

This is a brief note written by Hedgeye U.S. Macro analyst Christian Drake on 4/28 dispelling media reporting that “US GDP collapses to 0.7%, the lowest number in three years with the worst personal spending since 2009.”

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7 Tweets Summing Up What You Need to Know About Today's GDP Report

"There's a tremendous opportunity to educate people in our profession on how GDP is stated and projected," Hedgeye CEO Keith McCullough wrote today. Here's everything you need to know about today's GDP report.

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Cartoon of the Day: Crash Test Bear

In the past six months, U.S. stock indices are up between +12% and +18%.

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GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist

“If you saved in gold over the past 20 to 25 years rather than any currency anywhere in the world, gold has outperformed all these currencies,” says Stefan Wieler, Vice President of Goldmoney in this edition of Real Conversations.

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Exact Sciences Up +24% This Week... What's Next? | $EXAS

We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

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Inside the Atlanta Fed's Flawed GDP Tracker

"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.

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Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

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People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

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UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

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Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

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Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

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An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

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