LEISURE LETTER (05/07/2014)



Wednesday, May 7

• STAY Q1  – 830am

• STN Q1 – 4pm

• CZR Q1 – 5pm , Passcode: 20337702


Thursday, May 8

• PCLN Q1 – 730am

• MPEL Q1 – 830am , Passcode: MPEL

• CAR Q1 – 830am , Passcode Avis Budget

• BEE Q1 – 10am , Passcode: 10895989

• HOT – 10:10am presenting at Baird's 2014 Growth Stock Conference

• SGMS Q1 – 430pm , Password: SGMS


Friday, May 9

• HLT Q1 earnings – 10 am , Passcode: 25981567

• AHT Q1 earnings – 11 am


Monday, May 12

• DRH Q1 earnings – 10am , Passcode: 66393516

• HMIN Q1 earnings – 9pm


Tuesday, May 13

• HTHT Q1 earnings – 9pm , Passcode 28722442


Wells Fargo Gaming Conference in Las Vegas (all times EDT)

• 11:40 am PNK

• 12:20 pm IGT

• 12:20 pm CHDN

• 1 pm BYD

• 1 pm MGAM

• 1:40 pm PENN

• 2:25 pm BYI

• 5:05 pm SGMS

• 5:05 pm Seminole Gaming

• 5:50 pm GLPI

• 5:50 pm Golden Nugget

1:1 meetings only – MPEL, Station Casino, Motor City Casino & Hotel, and Jacob’s Entertainment.


BYI – announced an agreement with Golden Nugget, to connect BYI’s systems and slot products across all five Golden Nugget casinos (including upcoming Golden Nugget Lake Charles) encompassing nearly 6,400 slots and table games in four states, including Nevada, New Jersey, Mississippi and Louisiana.  BYI will replace a competitor’s systems at Golden Nugget properties in Vegas and Laughlin.

Takeaway:  Good deal for BYI.  We think it replaced Aristocrat's systems in Vegas and Laughlin. 

MGM – James Murren sold 26,778 shares of the company’s stock on the open market in a transaction that occurred on Thursday, May 1st. The stock was sold at an average price of $25.22, for a total value of $675,341. Following the sale, the chief executive officer now directly owns 22,286 shares in the company.

Takeaway: Not a ton of stock (may have been sold to offset taxes) but then again, he doesn't own a lot of stock - direct ownership is 22,286 shares while 175,329 shares are owned by a limited access spousal trust.

PENN / GLPI – Penn National announced Desiree Burke has resigned her position as vice president and chief accounting officer in order to accept a position at GLPI. 

Takeaway:  Move across the hall...


HT – announced that the Company has entered into a definitive agreement to purchase the 148-room Parrot Key Hotel & Resort in Key West, FL for $100 million. The hotel operated at an average daily rate (“ADR”) of $230.52 and occupancy of 92.3% in 2013. According to Hersha, the purchase price for Parrot Key reflects a trailing and forward 12-month economic capitalization rate, as of April 2014, of approximately 7.2% and 7.5%, respectively, and a 9.0% capitalization rate on stabilized earnings. For the trailing twelve months as of March 31, 2014, the hotel generated $7.5 million in EBITDA or approximately $50,000 per room.

Takeaway: This would appear to be a full price for a great quality asset in a consistently strong, transient destination market. 



Lawmaker urges government to close mainlanders´loophole to visit Macau Macau News

Lawmaker Antonio Ng Kuok Cheong urged the government Tuesday to close the loophole which is being used by mainlanders to stay in the city for up to nine days as "transit passengers".  According to current immigration rules, mainland Chinese passport holders are allowed to stay in Macau for seven days the first time they use Macau as a "transit point" before supposedly heading for a third destination. The second time within 30 days they enter they are given a two-day visa, while the third time they are routinely refused entry. However, if the mainland Chinese passport holder can prove that he or she went to a third destination from Macau, a seven-day visa will be granted again, with no limit on the number of times.  After 30 days the process re-sets itself.

Takeaway:  This issue continues to get more political spotlight.


Sands China boss says gaming demand sufficient Macau Business

Sands China CEO Edward Tracy expects Macau to have enough demand to keep all the forthcoming gaming industry capacity busy.  Tracy said, “We’re pretty confident that there’s plenty of market left to absorb the capacity that’s coming in 2017 and 2018.”

Takeaway:   We agree although the dealer labor situation needs to be addressed.


Missouri Gaming – Missouri lawmakers have passed a bill that will permit casinos in that state to offer lines of credit to high rollers. The measure now sits on the desk of Gov. Jay Nixon.

Takeaway:  Interesting advancement in gaming policy that would seemly make Missouri more competitive in regional gaming.


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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