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Macau market shares, new casino in LV, and some cruise discounting

 


EVENTS TO WATCH:  UPCOMING EARNINGS/CONFERENCES

TODAY “Fat Tuesday”

  • CONEXPO-CON/AGG – Las Vegas thru Friday
  • PEB –  8:50 a.m. Citi Global Property CEO Conference           
  • HST – 9:30 a.m. Citi Global Property CEO Conference
  • SHO – 10:10 a.m. Citi Global Property CEO Conference
  • MAR – 11 a.m. Raymond James Institutional Investor Conference
  • HOT – 2:15 p.m. Raymond James Institutional Investor Conference
  • DRH – 4:15 p.m. Citi Global Property CEO Conference

Wednesday, March 5

  • STAY – 7:30 a.m. Citi Global Property CEO Conference
  • LHO – 9:30 a.m. Citi Global Property CEO Conference
  • RHP – 10:10 a.m. Citi Global Property CEO Conference
  • FCH – 11:30 a.m. Citi Global Property CEO Conference
  • HT – 12:10 p.m. Citi Global Property CEO Conference
  • MAR – Mitsubishi Seattle Consumer Conference
  • BYD – 4Q13 earnings, AMC, 5 pm call

Thursday, March 6

  • Todd in Boston

COMPANY NEWS

2014 expected to be a 'busy year' for Kansas Star Casino Wichita Eagle

Ground will be broken in mid-March or mid-April on a 10k sq ft meeting and convention space and on an equestrian center. Both are scheduled to be completed almost simultaneously in January 2015, although a handful of equestrian events will be held this year.  Efforts also are under way to book more acts at the Kansas Star Arena, which opened last year.  

Takeaway:  While regional capex hasn't produced consistently great ROIs in recent years, the Kansas Star is one of the better performing casinos in the country. While not disclosed, we think the spend is not overly material.

PENN –  On Wednesday, PENN will formally contest the Racing and Gaming Commission’s refusal to renew its Argosy Sioux City license.  On Thursday, a Polk County Court will hear PENN’s lawsuit against the commission’s awarding of the casino license to the Hard Rock casino.  Also on Thursday, the IRGC is expected to approve standard 1-yr renewals of the state-licensed casinos, with the exception of the Sioux City market.

Takeaway:  PENN's situation here is looking bleak. We're not sure all the analysts have removed Sioux City EBITDA from their 2015 projections

IGT – secured 50% floor share of games at the new SLS Las Vegas resort and casino and will feature 400 IGT games on the casino floor.  The SLS Las Vegas, the renovated Sahara, will open in August or September and will feature 1,630 rooms.

Takeaway:  On a 4Q rolling basis, IGT ship share has been trending in the mid-high 30s.  However, IGT typically garners a higher share of new casinos/expansion with volume discounts and product giveaways.

 

Four Season Hotels – announced a partnership with Simmons for a new bed which features an interchangeable mattress topper that allows guests to select firm, medium or soft and will be put in place upon advance request by the guest.  The program is the result of a Four Seasons/Ipso study that revealed 92% of guests have a preference for bed firmness. 

Takeaway:  Could this be the next big capex replacement trend for lodging – similar to previous, bed (Starwood), showers, large HD televisions? 

NCLH/RCL – Both Norwegian Cruise Line and Royal Caribbean International rolled out 'kids sail free' offers on new bookings made during March.  

Takeaway:  Promotions remain prevalent, particularly in the Caribbean 

INDUSTRY NEWS

GAMING               

Sands China replaces SJM as casino market leader Macau Business 

According to Business Daily, the breakdown of market share % is as follows:  Sands China 25%, SJM 22%, GALAXY 21%, MPEL 12%, WYNN 11% and MGM 9%. 

Takeaway:  LVS is our favorite Macau name.  While hold likely played a part in the Feb increase, we believe LVS remains a share gainer.

New Jersey Gaming – State lawmakers are calling for a casino in Bergen County – specifically at the Meadowlands.  Resorts World New York produced $435 million for the State of New York. By comparison, a Meadowlands casino is estimated to produce $350 million in tax revenues for New Jersey almost $100 million more than the current Atlantic City casinos combined.

Takeaway:   New Jersey officials must do something as Atlantic City gambling revenues are now less than 50% of peak and on-line gaming is underperforming early revenue and tax estimates.

 

Cyprus Gaming Expansion – The government has signed a contract with “Deloitte Ltd”, which was selected on January 29, following an international public tender procedure, to provide consulting services for the licensing of an integrated casino resort.  In July 2013, the Cypriot Government unveiled plans to grant one licence for an integrated casino resort on the island, as Cyprus scrambles to woo investment to offset a deep recession.

Takeaway:  Well known as a tax-haven, more recently the island experienced a tourism boom and is serviced by many low cost European airlines. 

MACRO 

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.