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  • July 23:  TRIP 2Q call (430pm)
  • July 24:  
    • WYN 2Q call (830am) ; pw: Wyndham
    • PNK 2Q call (9am) ; pw: 27759616
    • LHO 2Q call (930am)
    • RCL 2Q call (10am)
    • PENN 2Q call (10am)
    • HOT 2Q call (1030am) ; pw: 61542222
    • AWAY 2Q call (4pm)
    • LA June revs released
  • July 25: PEB 2Q call (9am)
  • July 29: 
    • IGT 2Q release
    • GLPI 2Q call (10am)
  • July 30: 
    • MGAM 2Q earnings
    • MAR 2Q call (10 am) : , pw: 59383825


MPEL – it appears a delay in the opening for City of Dreams Manila could be in the offering.  MPEL's most recent commentary indicated COD Manila would open in conjunction with Golden Week this October. However, partner Belle's most recent commentary indicated an opening "toward the end of the year".

Takeaway: We're hearing the opening could be delayed to December.

BEL:PM – announced it sold its equity interest in a firm that jointly holds the casino licence for the City of Dreams Manila gaming resort for PHP10.85 billion (US$250.6 million) in cash. In a filing to the Philippine Stock Exchange, Belle noted the deed of sale had been executed covering the sale by Belle to Sinophil Corp of all its 100% equity interest in Premium Leisure and Amusement Corp.

Takeaway:  Executing on the previously announced strategy for Belle to focus primarily on real estate development and other allied businesses by separating the gaming assets into a new entity to facilitate public investors demand for gaming exposure.

DON:AU – In an Australia stock exchange filing, Donaco International Ltd announced it will spin off iSentric Sdn Bhd, its mobile technology unit, to focus on “operating and investing in leisure and entertainment businesses in the Asia Pacific.” Donaco International operates the newly-opened, Aristo International casino hotel in Vietnam which is a brand new 5 star hotel with 428 rooms, up to 50 gaming tables, 62 slots (max 150), and max 150 electronic table games.  As background, Donaco International was founded in 2001 by MD Joey Lim Keong Yew and his late grandfather, Tan Sri Lim Goh Tong (founder and chairman of the Genting Group)

Takeaway: Joey Lim Keong Yew and Benjamin Lim Keong Hoe appear to be emulating their uncle, Genting Chairman and CEO Tans Sri Lim Kok Thay, but thus far on a smaller scale.  A new Asian regional competitor for NagaCorp?

MGM – Springfield City Councilors approved the sale of the former Zanetti School and the Armory building to Blue Tarp ReDevelopment. The sale will close by July 31st, three months before Massachusetts voters head to the polls for the casino referendum. City Solicitor Ed Pikula said MGM will pay $3.2 million for the buildings, plus about $160,000 in lieu of property taxes. MGM’s plan calls for keeping the facade of the Armory and demolishing the school.

Takeaway: MGM becomes an owner of real estate in Springfield while waiting for groundbreaking until the Repeal Ballot Referendum in November

PENN & GLPI – The Missouri River Historical Development (MRHD), Argosy Sioux City's former non-profit partner, and the Sioux City Entertainment (SCE), the owner of the new Hard Rock Hotel and Casino, filed their counter motions with the Iowa Supreme Court Monday. MRHD wrote Argosy's situation is self inflicted and said Argosy's owner, Belle of Sioux City, abandoned MRHD as their non-profit partner in favor of a non-profit shell which led to them losing their license. SCE said in it's motion that allowing the Argosy to remain open would be delaying the inevitable as well as cause harm to not only SCE, but also the redevelopment of downtown Sioux City.

Takeaway: Stay tuned...we expect events to heat up as we approach the August 1st opening of Hard Rock Hotel and Casino.


Insider Transactions:

RHP – Chairman, CEO & President Colin Reed, in two 25,000 share transactions, exercised options at $28.13/share and then sold on July 18 at $49.81/share and July 21 at $49.4645/share. Reed now owns 790,017 shares as well as 14,032 options with a $28.13/share strike with a February 02, 2021 expiration, while other entities (trusts) own an additional 225,793 shares.

Takeaway: More insider selling...


Macau visitation (DSEC) –  Macau visitor arrivals increased by 5% YoY to 2,432,041 in June 2014.  Growth in visitor arrivals slowed after the increases during the Easter and Labor Day holidays.  Analyzed by place of residence, visitors from Mainland China totaled 1,597,289, +9% YoY, coming primarily from Guangdong Province (667,052), Fujian Province (72,061) and Hunan Province (57,960); Mainland visitors traveling under the Individual Visit Scheme rose by 11%, at 672,405.  Visitors from Taiwan (85,350), the Republic of Korea (41,786) and Japan (24,208) increased further by 12%, 24% and 25% respectively YoY, while those from Hong Kong (513,561) decreased by 8%.  The average length of stay of visitors was 1.0 day.

Takeaway: Slower growth in-line with our mass deceleration thesis, and an another HK decline.  Average length of stay continued to trend around the 1 day level. 

LEISURE LETTER (07/23/2014) - g

Singapore Changi Airport Traffic – handled 4.65 million passengers in June 2014, -0.3% YoY change. 

Takeaway: 1st dip since March

LEISURE LETTER (07/23/2014) - gg 

Macao Gaming Show – announced the show received support from two Macau government departments -- the Gaming Inspection and Coordination Bureau and the Macau Trade and Investment Promotion Institute. This year's Macao Gaming Show will take place at the Venetian Macao CotaiExpo from November 18-20.

Takeaway: Positive government support for an industry vital to the Macau economy.

Singapore Denque Fever Outbreak – The number of dengue cases reported this year reached 11,225 as of Monday, July 21, adding more than 1,000 cases to the 10,112 cases reported on July 10 and there are now 84 dengue clusters islandwide, with 22 of these considered "high risk" as there are 10 or more cases reported. Dengue fever is a painful, debilitating mosquito-borne disease caused by any one of four closely related dengue viruses. These viruses are related to the viruses that cause West Nile infection and yellow fever. There is no specific medicine to treat dengue infection.

Takeaway: A potentially challenging health issue which might may cause a change in consumer behaviors.

Hotel Financing: JW Marriott Chicago – a Wall Street investment bank provided a non-recourse, LIBOR-based floating rate $265,000,000 first mortgage financing for the 610-room JW Marriott Chicago, located in downtown Chicago, Illinois. The property is part of a 1.1 million square-foot mixed-use property, which occupies a full city block in the financial district of downtown Chicago.

Takeaway: Maybe the capital markets are opening to urban, upper-upscale and upscale hotel financing.  Will the Wall Street investment bank will place the mortgage into a CMBS transaction due to its size? 

Revel Atlantic City – despite Revel slated for an imminent auction, the property announced a room sale where by guests receive 15% off their rooms for Sunday – Thursday stays through August 28, 2014.  Reservations must be booked by Thursday July 24th to qualify and must use code: I-FBOOK

Takeaway: Come on down to AC, enjoy summer, and get your game on.

Upstate New York Gaming – Several casino bidders who say their proposed projects would help revitalize upstate communities are also seeking tens of millions of dollars in local property tax breaks. Nevele, the company bidding to build a $640 million destination resort in the Ulster County village of Ellenville, is seeking $100 million in tax breaks over the next 15 years, including $87.5 million worth of property tax relief from the Ulster County Industrial Development Agency. Two competing projects in Sullivan County, on the site of the former Concord resort in the economically depressed town of Thompson—the Montreign, which is backed by Empire Resorts, and Mohegan Sun—are also seeking an unspecified amount of property tax relief.

Takeaway: Initially positioned to "create jobs" and "stimulate the upstate economy" none of the politicians thought about the potential requests for property tax relief.

Lodging Industry Transaction – Vantage Hospitality Group, a privately held company with headquarters in Coral Springs, agreed to acquire the brands owned by America’s Best Franchising. The acquisition, expected to be final by the end of the year, will add more than 225 hotels to Vantage Hospitality’s existing portfolio of more than 1,000 properties. All the hotels under both companies are individually owned and operated under franchise agreements, with the exception of one asset in Las Vegas that Vantage owns and operates.

Financial terms of the deal were not disclosed.  Vantage Hospitality brands include Americas Best Value Inn, Lexington by Vantage hotels, inns and suites and international Value Inn offshoots. None of the brands have locations in South Florida.

Takeaway: Could an IPO be in the future?


Singapore CPI – the consumer price index in Singapore increased 1.8% in June year-over-year, down from 2.7% in May according to the Department of Statistics.

Takeaway: We've proven statistically that higher CPI is one of the factors that leads to lower GGR.  While June CPI was a little better than May's, Q2 CPI growth averaged 2.3% vs Q1 CPI growth of 1.0%.

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.