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TICKERS: G13.SI, CZR, HOT, LQ, CCL

EVENTS TO WATCH:  UPCOMING EARNINGS / CONFERENCES / RELEASES

Wednesday - Thursday, April 9-10

Mid-America Gaming Congress (Columbus, OH)

Wednesday, April 9

SHO Investor Day

Thursday, April 10

HST Investor Day

Monday, April 14

Atlantic City March revenues 

COMPANY NEWS

GENTING - expects to go before Nevada gaming regulators on May 7th or 8th for the suitability ruling that will bring the start of construction on the Las Vegas Strip’s next super resort, a $2 billion project with an Asian theme.

TAKEAWAY:  We are currently in Las Vegas and it would seem the suitability ruling is mere formality as we witnessed construction already underway at the RWLV (Echelon) site.

 

Macau Legend -  Fisherman’s Wharf renewal to finish before 2017 Macau Daily Times

CEO of Macau Legend Development (MLD), David Chow Kam Fai, has estimated that the renewal of Fisherman’s Wharf will be finished before 2017.  He revealed that MLD will apply for another 350 gaming tables once the renewal is completed, which will boost MLD’s number of gambling tables to around 500.  Currently, MLD has ~140 gaming tables.  Chow indicated that the first hotel of the renewal project would be opened in August 2014.

TAKEAWAY: More supply...

CZR - Online Gambling not taking business away from land casinos

Caesars spokesman Seth Palansky told the Press of Atlantic City Tuesday that the company does not believe gamblers logging on to the online sites are staying home to have a flutter instead of traveling to Atlantic City. “We’re finding very similar patterns as other companies. The people online are people that haven’t visited us in a while or are new players altogether,” Palansky said. “We’re not seeing cannibalization.” In the Caesars study many online gamblers are accessing the websites from locations that are just an hour’s drive from the land operations, but they are not the same clientele who usually visit the land casinos.

TAKEAWAY:  Not hard to make these conclusions when I-gaming is only $10 million/ month.  Borgata remains the leader in I-Poker which we believe is the most important stat.

 

HOT - sold the Aloft Tucson University to Lightstone Value Plus Real Estate Investment Trust II, Inc for $19 million or $127k per key.

TAKEAWAY:  The execution of the asset light strategy continues.

LQ - LaQuinta IPO priced at $17 (below $18-21 price range). Offering upsized from 37.2 million to 38.3 million shares.

TAKEAWAY:  Low pricing shouldn't have been a surprise given the multiples for the indicated range.

CCL - AIDAprima delivery to be delayed by 6 months. Seatrade Insider

The maiden voyage will now start from Yokohama, Japan on October 1, 2015.  "Mitsubishi Heavy Industries asked us for more time to complete the construction of AIDAprima,’ said AIDA spokesman Hansjörg Kunze.  "Although we were surprised by the request, it is nothing unusual for the construction of prototypes," he added.

 TAKEAWAY:  Shifting berth growth to Q4 2015.  Berth count should grow ~3% in 2015.

INDUSTRY NEWS

412,000 Visitors during Ching Ming Festival Macau Daily Times

According to the Macau Public Security Police Force (PSP), the number of Macau visitors hit 412,000, +16.9% YoY. Nearly 70% of the border crossings were made using the border gate connecting to Gongbei in Zhuhai. The Macau Ferry Terminal was the second-most popular checkpoint for both arrival and departure, accounting for some 12% of total numbers. 

TAKEAWAY: Don’t blame the holiday (or weather) for the weak early April GGR results

Google Checks In to the Hotel Business WSJ.com

Google had struck a licensing deal that will give it access to technology from hotel-booking software startup Room 77.  By adding more photos and reviews to its hotel listings, they increasingly resemble those of OTAs.   The idea is to encourage travelers to plan more of their trips directly on Google. In the process Google gets them closer to making a booking, which experts expect will make referrals more valuable, prompting travel agencies and hotel operators to pay more for clicks on Google ads over time. It also encourages more hotel operators to place ads on Google directly, bypassing online travel agencies that charge commissions of up to 25%.

TAKEAWAY:  Google has always been a formidable competitor and partner for the OTAs.  Is this finally a game changer in the hotel search business? Regardless, it’s negative for the OTAs, particularly for TRIP.

SLS Las Vegas began accepting hotel room reservations

Initial room rates from now through the end of April 2015, include a promotional opening rate of $109 per night on weekdays and $139 per night on weekends. The offer requires a two-night minimum stay and is valid beginning Sept. 1 through Dec. 27.

TAKEAWAY:  The SLS Las Vegas is positioned as a luxury, boutique hotel and maybe viewed as a competitive threat to Wynn and Encore.  However, the SLS does not appear to offer the same level of amenities as Wynn and Encore.   Yet, Las Vegas visitor has demonstrated a willingness to try new properties – especially at a promotional rate. 

Cruise Industry Continues to Battle Unfavorable Tides WSJ

According to a Harris Poll surveyed between Feb 10-14, 2014, consumer perceptions of the cruise brands fell relative to January, following norovirus incidents on Caribbean Princess, Explorer of the Seas, and Norwegian Star).

 

"We've all heard the saying that a rising tide lifts all boats," says Deana Percassi, Vice President and Public Relations Research Consultant with Nielsen, "but the inverse also holds true. In a field as crowded as the cruise industry, bad press for a small handful of brands -- or even a single one -- can have negative repercussions for major players across the board." 

A majority of Americans (54%) also agree that they're less likely to take a cruise now than they were a year ago, with this sentiment proving stronger among those who have never taken a cruise (58%) than among those who have (44%). 

TAKEAWAY:  Not comforting stats for the cruise industry.  Although, we've already heard February was a weak month.

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.