LEISURE LETTER (06/25/2014)

Tickers: IGT, RCL, HOT, MAR

COMPANY NEWS

IGT – BWIN.PARTY agreed to integrate IGT's mobile and online game offerings into BWIN's US and European web-site portals.

Takeaway:  Licensing royalty deal for IGT

    

RCL – announced a sale featuring 50% off 2nd guest (excludes taxes, fees, port charges) for select 2015 and 2016 sailings. This offer ends July 15, 2014.

Takeaway: This (Buy One Get One) 50% deal was extended from May's promotions.

 

Insider Transactions

HOT – CEO Frits D. Van Paasschen sold 51,435 shares on Thursday, June 19th at an average price of $81.01/share and now owns 246,915 shares. The shares represent 25% of an equity award covering 102,870 shares which vested in four equal installments beginning 2/28.2009.  The cost basis of the security was $48.61/share.

 

MAR – J W. Marriott, Jr. sold 200,000 shares on Friday, June 20th at $63.47/share and now directly owns 188,229 shares.

Takeaway: As we've repeatedly written, if the lodging industry fundamentals are so strong and the industry is only in the fifth inning, why is insider selling increasing? 

INDUSTRY NEWS

IVS - Macau, Beijing in talks on Individual Visit Scheme (GGRAsia)

Macau’s Secretary for Social Affairs and Culture, Cheong U, and mainland China officials have discussed whether changes should be made to the Individual Visit Scheme (IVS).  The scheme allows mainland passport holders to visit Macau and Hong Kong as independent travellers rather than as part of a tour group. 

 

Local residents have expressed concerns in mainstream and social media about the growth in visitor arrivals. Some tourism experts and tourism industry insiders have called for a strategic plan to ascertain the city’s capacity to receive more visitors.

 

Takeaway:  Visitation hasn't been off the charts lately so it would seem odd to change the IVS program. 

 

Pokerstars - could be live in NJ by autumn (EGR Magazine)  

Takeaway:  While we don't know how the NJ Division of Gaming Enforcement will handle the Pokerstars acquisition by Amaya, they could take over the NJ I-gaming market if allowed by DGE.  Pokerstars would use the Resorts Casino license.

 

Macau Infrastructure – The Pac On ferry terminal faces more delays.  Currently, only a temporary terminal is in operation, with a limited number of sailings per hour. 

Takeaway: More delays 

 

Philippines Tourism – Short-term travel movements to and from the Philippines by Australian residents increased 11.6% year-over-year to 67,300 in the four months to April 30, according to the Australian Bureau of Statistics. 

Takeaway: Would appear to be a shift away from Thailand and Malaysian destinations toward the Philippines and could serve a broader customer base for the Manila casinos. 

  

Nevada Online Poker – Peppermill Resorts launched "Ultimate Online Poker" an online poker offering with a system run by Ultimate Gaming, a Station Casinos controlled company.  Peppermill is the fourth online gaming offering in Nevada, joining Stations Casinos, Caesars and South Point.

Takeaway: Slow and steady expansion of online poker. 

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.


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