LEISURE LETTER (04/29/2014)

Tickers: MGM, BEE, NCLH

 

EVENTS TO WATCH 

Tuesday, April 29

  • Las Vegas March revenues out
  • NCLH Q1 – 10am , Passcode: 22334128
  • VAC Q1 – 10am , Passcode: 4679876
  • MGM Q1 – 11am , Passcode: 20455736

Wednesday, April 30

  • PNK Q1 – 8am , Passcode: 27759612
  • GLPI Q1 – 9am
  • MGAM Q1 – 9am  
  • MAR Q1 – 10am , Passcode: 10575194
  • H Q1 – 1130am , Passcode:  11561402
  • BYD Q1 – 5pm , Passcode:  44440004

Thursday, May 1

  • GENTING Q1 
  • WYNN Q1 – 430pm , Passcode:  17666834
  • HST Q1 – 10am
  • OEH Q1 – 10am , Passcode: 22074904
  • FCH Q1 – 12pm , Passcode: 28469900
  • BYI FQ3 – 430pm
  • EXPE Q1 – 430pm

Friday, May 2

  • April Employment Report
  • HT Q1 – 9am , Passcode: 1398938

Tuesday, May 6

  • RHP Q1 – 10am , Passcode: 25122491
  • SHO Q1 – 12pm
  • TRIP Q1 – 430pm

COMPANY NEWS

MGM – CEO Jim Murren was interviewed by the famous Robin Leach and the Las Vegas Sun regarding MGM's new tourism/guest venues/experiences along the Strip.  Murren promised "the transformation will grow to include all of his company’s properties on the Strip."  (Las Vegas Sun)

Takeaway:  Seems like an attempt to refocus the investment thesis away from room rate growth, which slows post Q1.  We remain skeptical of a sustained, v-shaped Las Vegas recovery. 

 

BEE – announced it closed a new $300.0 million stock secured credit facility with an accordion feature allowing for additional borrowing capacity up to $400.0 million. The facility's interest rate is based upon a leverage-based pricing grid ranging from LIBOR plus 175 basis points to LIBOR plus 250 basis points.  Initial pricing will be LIBOR plus 200 basis points, which is a reduction from the previous facility's pricing of LIBOR plus 275 basis points.  The facility has a four-year term with a one-year extension available to the Company. The facility is secured by an equity pledge in direct and indirect subsidiaries that own, lease or operate five of the company's assets: the Four Seasons Jackson Hole, Four Seasons Silicon Valley, Marriott Lincolnshire, Ritz-Carlton Half Moon Bay and Ritz-Carlton Laguna Niguel hotels.  Deutsche Bank Securities Inc. and JP Morgan Securities LLC served as Joint Lead Arrangers and Joint Book Running Managers for the facility.

Takeaway:  Similar capacity, modestly lower rate which reflect the company's overall improved balance sheet. 

  

NCLH – kicked off a five-day promotion on Hawaii sailings. The Hang Ten offer gives customers a $100 per cabin on-board spending credit when booking a seven-day voyage around the islands on the Pride of America. Customers get an additional $100 credit when signing on for a longer cruisetour.  The credits are in addition to air credits of up to $400 and military, Latitudes Rewards and AARP discounts that also are available on select sailings.

Takeaway:  Are Hawaii promotions heating up as well?

  

INDUSTRY NEWS

Around 350 thousand tourists to visit Macau during Labor Day holiday Macau News

According to Macau Government Tourist Office (MGTO) Director Maria Helena de Senna Fernandes, the number of tourists visiting Macau during the holiday period would be more or less the same as last year, adding even the number of hotel room reservations may increase during the holiday period, it will not be enormous. In 2013 a total of 342,000 tourists entered Macau over the Labor Day holiday (April 30 to May 2), according to official data.

Takeaway:  Golden Week is the prize anyway.

 

Macau Infrastructure - a new automobile tunnel, called Ka-Ho Tunnel, a project that will link the east of Cotai to the northeast tip of Coloane island - is expected to start in the third quarter of this year and last for at least 2 years. The tunnel construction project, which cost the project from over 254 million patacas (US$31.8 million) to about 540 million patacas. The proposed construction period ranges from 900 days to 930 days.  The two-way tunnel, comprising four lanes, will have its northern entrance start near the Rua da Central Térmica de Coloane in eastern Cotai. The tunnel will be connected to the area near Ka-Ho Port, the northeastern tip of Coloane island where Macau Oil Terminal and Macau Cement Manufacturing Co Ltd are located.

Takeaway:  As frustrating as the infrastructure delays have been, they are happening and should contribute to long term double digit Mass growth.

 

New Mexico Tribal Gaming -  The New Mexico Gaming Control Board reports that slots gambling at tribal casinos declined 0.1 percent last year compared to 2012.  Total tribal net win was $758.6 million in 2013 compared to $759.7 million the prior year.  The nine tribes and pueblos that have renegotiated their 2001 compacts pay the state between 3 percent and 9.75 percent of their net win.

Takeaway: Modestly better results than other jurisdictions but still flat and not positive growth. 

MACRO

China Economic Growth - The International Monetary Fund raises its economic growth forecast for China but warns that its financial system faces risks due to the rapid expansion of debt. The IMF’s 0.3 percentage point increase to 7.5 percent in its growth outlook for China.

Takeaway: Surprising but not a negative.

 

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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