LEISURE LETTER (07/01/2014)



  • Thurs July 3: ISCA 9 am Q2 earnings , pswd 69156862


880:HK / SJM Holdings – (GGRAsia)  According to industry figures, here is the June GGR shares:

  • SJM: 24.9%
  • LVS: 22.0%
  • GALAXY: 21.1%
  • WYNN: 9.5%
  • MPEL: 12.2%
  • MGM: 10.3%

Takeaway: Strong showing by the local, Chinese mass-centric operators.


GLPI & ISLE – late yesterday Reuters reported Isle of Capri (ISLE) is in renewed sales talks with Gaming & Leisure Properties (GLPI)

Takeaway: We are EXTREMELY skeptical of such discussions leading to a completed transaction! 

H – Toronto, Ontario-based Westmont Hospitality Group is on the verge of buying the Park Hyatt Washington from Hyatt Hotels Corp. for $100 million or $462,963 per key for the 216-key hotel located at 1201 24th St. NW - near embassy row.

Takeaway: The capital recycling program continues.


HOT – is reportedly in talks with the owner of the five-star Nikolskaya Hotel in Moscow to convert the property to a St. Regis Hotel. 

Takeaway: If you can't build 'em, convert 'em - especially in the luxury segment of lodging. 


OEH / BEL – formally changed its name from Orient-Express Hotels Ltd. to Belmond Ltd. following approval from shareholders at the 2014 annual general meeting of shareholders held yesterday. Additionally, the Company intends to change the ticker symbol of its class A common shares listed on the New York Stock Exchange from OEH to BEL on July 28, 2014

Takeaway: On April 28, we suggested potential new ticker symbol of "BMD" - it seems simplicity was an overriding factor. 


RHP – announced a $14 million expansion and renovation of Ryman Auditorium. The building's historic auditorium, renovated in 1994, will remain unchanged while the renovation will focus on the building's addition, which was completed in 1994.

Takeaway: Building out the non-core lodging amenities similar to MGM's current ancillary development in Las Vegas.


CCL P&O and Cunard Line's 6% extra bonus promise (TTG Digital)

P&O Cruises and Cunard (CCL brands) are offering travel agents bonus commission of up to 6% in a new booking promotion.  They are paying the extra commission on selected bookings for departures between September 2014 and June 2015.


The lines will be paying the 6% bonus, on top of standard commission of 7.5%, to agents for sales of P&O’s Select Price and Cunard Fare tickets, while agents can also earn an extra 3% commission for bookings of Early Saver fares for both brands.

Takeaway: While we have been seeing more commission incentives lately, CCL's commissions as a % of ticket revenue has been pretty steady this year.


RCL - Developing tour subsidiary (Travel Weekly)

RCL has confirmed it is working on a new subsidiary focused on developing and marketing land tours around the globe.  The new company is still in formation, but RCCL has named John Weis, its former vice president of global tour operations, to spearhead its development.

RCCL already offers guests on its three cruise brands thousands of tours in hundreds of destinations. It said the new subsidiary, to be called TourTrek, will operate in 90 countries and will be wholly owned by RCL.


Macau June GGR (DICJ) Macau’s casino revenue fell for the first time in five years in June to HKD26.422 billion (MOP 27.215 bn), down by 3.73% year/year or approx. HKD1.023 billion and also down 15.88% month/month or approx. HKD4.989 billion.

Takeaway: We will receive the monthly details at the end of this week.


Singaporeans to Spend More - According to the Visa Affluent Study, affluent Singaporeans are planning to spend more on dining, entertainment and travel this year, and the willingness to open their wallets is being driven by an increased optimism in the local economy.  82% of affluent respondents from Singapore (defined as cardholders that earn more than US$100,000 (S$124,600) in annual income) intend to spend the same or more this year than they did in 2013.


Takeaway: A potential uptick for the locals/mass segment at RWS and MBS? We haven't seen mass growth in 2014 yet.


New York Upstate Gaming Expansion – following the June 30th deadline for filing a formal application for the four potential licenses, both PENN and CZR completed final applications.  A total of 17 final bids were submitted for the potential four licenses.  The final bids will be evaluated by the State of New York.

Takeaway: Let the marketing and public relations efforts start telling the story for why each sponsor's project is the best option...


Mississippi Gaming Expansion – the Mississippi Gaming Commission voted to allow Land Holdings One to begin construction on the Scarlet Pearl Casino Resort, after the company secured the $280 million in financing needed to build the resort. The Scarlet Pearl will be built on property along Biloxi's Back Bay and will have 60,000 square feet of gaming space with more than 1,000 slot machines, a 300 room hotel tower, and a 36 hole miniature golf course.  The property is scheduled to open during Summer 2015.

Takeaway: As soon as one property closes, another property breaks ground to open.  Scarlet is expected to open with around 1,350 slots in 2015.


China Macro Data

  • Manufacturing PMI 51.0 vs 51.0 consensus and 50.8 prior - six-month high\
  • HSBC manufacturing PMI 50.7 vs 50.8 consensus and 49.4 prior -- the first reading above 50 this year

Takeaway: June final economic data was in line with "flash" estimates during the month and continued the recent improving trend. 


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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