LEISURE LETTER (04/22/2014)



Tuesday, April 22

  • IGT FQ2 earnings:  5 p.m. Conf Call   , Passcode: IGT

Thursday, April 24

  • WYN Q1 earnings - 8:30 a.m. , Passcode: Wyndham
  • LHO Q1 earnings - 9:30 a.m.
  • PENN Q1 earnings - 10 a.m.
  • RCL Q1 earnings - 10 a.m.
  • HOT Q1 earnings - 10:30 a.m. , Passcode: 12049644
  • LVS Q1 earnings - 4:30 p.m. ; PW: 18236529
  • LA March revenues out

Friday, April 25

  • PEB Q1 earnings – 9:00 a.m.

Monday, April 28

  • CHH Q1 earnings – 10:00 a.m. , Passcode: 70683172

Tuesday, April 29

  • NCLH Q1 earnings 
  • VAC Q1 earnings – 10:00 a.m. , Passcode: 4679876
  • MGM Q1 earnings – 11:00 a.m. , Passcode: 20455736



PNK - Activist group Orange Capital has acquired a 4.5% stake in PNK.  Orange Capital would like PNK to consider a REIT spin-off.

TAKEAWAY:  We are highly skeptical that PNK could obtain a Private Letter Ruling from the IRS for a tax-free spin-off.  That doesn't mean there aren't other avenues for unlocking real estate value.


MGM - has begun site preparation for its Prince George's County casino and could start construction in July, 

TAKEAWAY:  On time timetable


NCLH - announced its DASH sale, offering exceptional savings on all sailings of three days or longer, fleet-wide. Guests who book a Norwegian cruise vacation from Tuesday, April 22, 2014 through Friday, April 25, 2014, can receive up to $250 per stateroom to spend on board (based on cruise length and stateroom category) and reduced deposits. Air credits up to $1000, Military, AARP and Latitudes Rewards discounts also apply to select sailings.

TAKEAWAY: This is a WAVE sale for post-Wave...not good.

CCL - Princess pulls back to one ship in Japan, adds shorter cruises Seatrade Insider

For 2015, its third season in Japan, Princess Cruises will deploy Diamond Princess but not Sun Princess, which is going to Australia. The line will also introduce cruises as short as three nights to appeal to local travelers seeking a quick get-away.

TAKEAWAY:  Decision likely based on tough demand environment in Japan.


RCL -entered into a credit agreement for the US dollar financing of a portion of the third Oasis-class ship (the “Dollar Facility agreement”) for 178 million euros. Oasis 3 is expected to be delivered Q2 2016.




Tiger Resort - (Macau Business Daily) Okada's Manila integrated resort will be ready to open by end of 2015.  With an investment ranging from US$1.3 billion to US$1.5 billion, the first phase will focus on gaming.  It will offer 1,000 rooms with 3,000 slot machines and 500 tables, the majority of which will be for baccarat. For the gaming promoters market, the complex will offer nine junket rooms, the biggest with 20 tables, and an option for six more.


Being an integrated resort casino, the Tiger will also have, in this first phase, some 7,500 square metres of shopping area, 2,400 parking places, nightclub and beachclub and a dancing fountain, similar to the one in front of the Bellagio in Las Vegas “but bigger”, says the vice-president for casino operations, Matt Hurst. 

Hurst said Universal Entertainment is “very confident” that the final license for Tiger Resort will be issued by the Philippine authorities, namely PAGCOR.

TAKEAWAY:  Still unresolved issues before we pencil this timetable in.


Packer eyes Cosmopolitan - (The Australian) The owner of the Cosmopolitan, Deutsche Bank, is calling for bids before the close of business today.  Crown Resorts headed by James Packer could bid US$ 2 billion.  The Cosmopolitan, built at a cost of about US$4 billion, opened in 2010 and has never turned a profit.

TAKEAWAY:  $2 billion still sounds like a lot to us.


Crimea casinos -  Crimean first deputy PM hopeful about gaming zone Macau Business
Crimean First Deputy Premier Rustam Temirgaliyev thinks a gaming zone in Crimea may prove to be a serious rival to Macau, Las Vegas and Monaco.  Temirgaliyev said, “Our task is to create a tourist cluster, which will operate year-round, using a gambling zone as an advantage. We have been considering construction of a gambling township on Crimea's southern coast and have been considering several more sites.”  He said plans would be drawn up by the middle of May.

TAKEAWAY:  Not sure the Macau operators are exactly bracing for this new competition just yet.


Japan -  Japan Theme Park Considers Buying Island to Boost Casino Appeal Bloomberg

Huis Ten Bosch theme park is thinking of buying a deserted offshore island in an expansion to boost its appeal as a possible site for a casino resort.  “We are planning to buy new land to offer more games at the Huis Ten Bosch theme park,” said Hideo Sawada, chairman of the Tokyo-based travel agency and park operator.  He said at least 100 billion yen ($974 million) is needed to fund a gambling resort at the park.  


H.I.S., the country’s largest listed travel agency, plans to lease land to casino developers at Huis Ten Bosch in Nagasaki on the western edge of Japan’s Kyushu island.  The travel agency is in talks with video game makers in Japan and overseas to partner on building what Sawada calls a “Game Kingdom” at Huis Ten Bosch.  The facility will offer a variety of interactive games, including a paintball-like battle simulation known as “survival games” in Japan.

TAKEAWAY:  Let the jockeying begin...


STR - Upper upscale REVPAR ended March up 8.5%. 

TAKEAWAY:  Q1 UUP REVPAR will be solid at ~6.5% but we think April will show a sequential deceleration.


Hotel M&A - Concord Hospitality Enterprises announced the sale of a portfolio of 13 premium-branded, select-service hotels to companies owned by a global investment fund for approximately $240 million in an all-cash transaction. Concord will continue to operate the hotels under a long-term management agreement. The portfolio is comprised of a total of 1,650 rooms representing 11 Marriott and two Hilton-branded hotels

TAKEAWAY:  Average price per key of $145k which seems about right for a transaction in the upscale segment.


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.

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