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Tickers: MGM, CZR, WYNN, BEL


  • July 15-17 Pre-RCL earnings Hedgeye Cruise pricing survey


MGM:  Macau Growth Under Threat as Chinese Travel Farther: Ho Bloomberg

"I'd say the slowdown in the economy and the fact that now the foreign destinations might become competitors" are the biggest risks to Macau's growth," said Pansy Ho, co-chairwoman of MGM China. As Chinese tourists travel more frequently and farther afield, the city could gradually lose its appeal, said Ho, who's nicknamed "casino queen" by local media. "We're already beginning to see that the customers coming through our doors are more demanding, they now know how to differentiate."

Takeaway:  As more Asian destinations open up to casinos in the future, Pansy's point makes sense.  The Chinese macro concern is also warranted.

1680:HK Macau Legend – (Apple Daily) reported that the company's application for 50 to 100 new tables for Macau Legend was submitted in December last year, and that the company’s management had expressed confidence to fund managers and stock analysts that approval could be gained within the first half of this year - however, so far there has been no news on the approval.  Back on October 8, 2012, the company in consultation with Sociedade de Jogos de Macau SA submitted a request to the Gaming Inspection and Coordination Bureau to increase Macau Legend’s table allotment from 146 tables to 500 with the initial 50 to 100 new tables as the first batch of the 350 tables that Macau Legend would like to apply for from the government. 

Takeaway: Slower than expected table game approval process...this could be a foreshadowing of the difficulty in securing new tables for the properties that are expected to open in 2015 and 2016. 

CWN:AX Crown Resorts – the company today secured a restricted gaming license for its Crown Sydney development, Barangaroo. As a result of receiving probity clearance, Crown will pay $95 million to the state government within five days. A $5 million deposit was paid in July 2013. The Crown Sydney project it still subject to planning approvals and negotiations with Lend Lease and the Barangaroo Development Authority. Crown’s restricted license allow visits by only members and their guests, prohibition of poker machines and minimum bet limits on table games. The features are designed to tailor the casino to high rollers.

Takeaway: The approval was widely expected and once operational the property could generate more than half of Crown Resorts revenues and profits.

CZR – A consortium including Caesars, OUE and Lippo Group paid into an escrow account the initial US$10 million deposit toward the cost of land for a major gaming resort near South Korea’s Incheon International Airport.  The investors hope to complete the approval phase within eight months, with a possible first phase opening in 2018.  A condition before moving to the development phase will be that the consortium gets approval from Incheon Development & Tourism Corp – the body charged with urban redevelopment and economic growth in the area – for the design of the resort

Takeaway: A positive step in the ultimate development process.

IKGH (Macau Business Daily) According to IKGH, “any opening of additional casinos and hotels is likely to result in a significant increase in the number of VIP gaming rooms, intensifying competition in Macau’s VIP gaming business and for VIP gaming promoters.”  Iao Kun has VIP gaming rooms in the StarWorld Hotel and Casino, the Galaxy Macau, the City of Dreams Macau, Sands Cotai Central and L’Arc casino.  

Takeaway:  So trying to secure VIP rooms in the new properties might be a good strategy?

WYNN & 1128:HK (Macau Business) The International Union of Operating Engineers has asked the Macau government how certain mainlanders came to hold rights to land in Cotai where Wynn Resorts Ltd means to build a casino-resort.  International Union of Operating Engineers representative Jeffrey Fiedler said: “The Macau government should provide an explanation about how this group from Beijing acquired this initial commitment for the land in Cotai.” Wynn Resorts Ltd paid the holders US$50 million (MOP400 million) for the rights to develop the land.

Takeaway: While considered a gadfly by most Macau observers, Mr. Fielder is trying to make life difficult for Mr. Wynn.

BEL – announced that it has signed a management agreement with Cadogan Estates Limited to operate The Cadogan, a 64-key hotel on Sloane Street in the heart of Chelsea, London, as part of the Company’s collection of luxury hotels and travel experiences.  The property will close at the end of July, undergo a $48 million investment project and the Belmond Cadogan will open in summer 2016. The re-conceptualization will include the complete refurbishment of all public areas and the reconfiguration of 64 rooms to 54 in order to accommodate demand from luxury travelers for larger junior suites and suites.

Takeaway: A great property addition in a great location and city, which we believe will command a super-premium ADR.  


Japanese Gaming Expansion (Kyodo News) Following the recent Universal Studios Japan announcement that it would seek to add a casino to its property in Osaka, Japanese theme park operator Huis Ten Bosch Co Ltd announced it is searching for a partner to develop a casino resort next to its Nagasaki, flagship property if casinos become legal in the country.  Huis Ten Bosch President Hideo Sawada indicated “We’re seeking a sophisticated and elegant European-style facility next to the Huis Ten Bosch theme park," while also noting  his company would not directly operate the facilities – at least on the short-term – due to lack of know-how on gaming operations.

Takeaway: Local companies taking the public relations lead in Japan for companies which look to enter the gaming business.

Japanese Gaming Expansion(Japan Times) MGM Resorts International and Macau-based Galaxy Entertainment Group Ltd are the front-runners to win a licence for an Osaka casino resort, if casino gambling is legalised in the country, the Japan Times reports.  The newspaper said Osaka Governor Ichiro Matsui and Osaka Mayor Toru Hashimoto on Tuesday reacted negatively to the idea of USJ Co Ltd, the operator of Hollywood-themed entertainment park Universal Studios Japan in Osaka, bidding for a casino license. Japan Times quoted Mr Matsui as saying: “USJ has no experience at all in the casino sector.”

Takeaway: We believe this story is merely noise in the intensifying public relations battle.

Massachusetts Gaming (Boston Globe) Mayor Marty Walsh and Mohegan Sun have reached an agreement in principle regarding a deal in which the casino developer will pay the city to make up for a Suffolk Downs casino. In accepting the casino company’s offer, Walsh would give up on his insistence that East Boston vote on the project as a “host community” under the 2011 casino law.

Takeaway:  Mohegan in the lead but too many interested parties.


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.