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Chart Du Jour:  June mass revenue growth and visitation seem to have begun their descent – in-line with our mass deceleration Macau thesis.

  • June Mass growth was below expectations at +27% and with the release of the Macau visitation figures today, we can say the same about visitation
  • As analysts continue to eschew VIP in favor of mass – emphasizing 30% growth rates in 2H 2014 – we take the other side.  Relative to sentiment, VIP is starting to look more stable while mass appears in deceleration mode.
  • We outlined our mass deceleration thesis in our 06/13/2014 note “MACAU: HANDICAPPING MASS DECELERATION”.  We reiterate our positive long term outlook for Macau but caution investors that YoY mass revenue growth could decelerate into the mid to high teens by year end.  Indeed, the deceleration appears to have already begun.




Cartoon of the Day: Good As Gold

Takeaway: Unless an ideological change occurs at the Fed, the predictable monetary policy response to growth slowing data points will continue.

Cartoon of the Day: Good As Gold - Gold cartoon 07.23.2014


Consensus estimates, management guidance and commentary, and questions for management in preparation for the earnings release/call tomorrow




  •  Total revenues:  $1,338 million
    • Vacation Ownership:  $667 million
    • Vacation Exchange & Rentals $402 million
    • Lodging $280 million
  • EBITDA $320 million
  • EPS $1.14/share




Q2 2014:

  • Adjusted EPS:  $1.11 to $1.13
  • No share repurchases factored into guidance
  • During the period April 1, 2014 through April 23, 2014, WYN repurchased an additional 0.6 million shares at an average price of $71.98 for a cost of $42 million.

Full Year 2014:

As of March 31, 2014

  • Revenues:  $5.25 - $5.35 billion
  • EBITDA:  $1.215 - $1.24 billion, organic growth 6% - 8%
  • EPS:  $4.28 - $4.38



  1. How much capital does WYN have "stuck" in Venezuela due to the Porlamar, New Sparta?  How does the company plan to deal with this "at risk" capital?
  2. Discuss peak season summer vacation bookings (trends - occupancy and rate) and cancellation rates.
  3. Discuss how the recent national umbrella television advertising campaign has increased consumer awareness and how that awareness translated into room reservations. How will the company change the targeting of the advertisement between now and Sept 21?
  4. Discuss current M&A pipeline and pricing vs. return expectations
  5. View on increasing dividend as compared to growth in free cash flow
  6. With the WYN stock trading near $73/share, what is managements view on stock valuation?
  7. Discuss recent credit trends within Vacation Ownership segment - receivables write-downs, reserves, and impairments?
  8. How has the vacation ownership podium presentation format impacted sales trends?
  9. Plans for an additional time-share receivables securitization during 2014?



Lodging Segment

  • The general economic environment in Europe is improving and the operating enhancements that Wyndham put in place (namely technology) will enhance yield management capabilities and streamline cost structures.
  • Anticipate margin improvement in our hotel group.
  • Hotel Group will see first ever umbrella marketing program with a national advertising campaign in spring 2014.

Vacation Exchange & Rentals

  • As of early April, peak summer bookings for Wyndham's European vacation rental businesses were comfortably ahead of last year - more volume than it was pricing - up high single-digits.
  • (Guests) are booking earlier.
  • A decline in exchange revenue per member, primarily resulting from the decline in Latin America due largely to the ongoing economic and political environment impacting Venezuela customer base, where access to foreign currency is limiting travel.
  • Summer is looking good. Visibility into that (booking trends) is difficult due to a shorter booking window.
  • Largest European rental market is Holland, and the Dutch consumer's feeling much more confident than he and she were two years ago, and even more than last year.
  • Seeing some positive trending in consumer confidence in Europe and see this in the advance bookings.
  • (Goldman Conference) Advance bookings have been up, strong single-digit, low double-digit growth in different pockets of the market so call it 10% booking improvement. As the yield management systems kick in, expect ability to push price closer to the time of travel.

Vacation Ownership

  • Targeting just over 30,000 new customers this year versus about 27,000-28,000 last year
  • Conditions in the ABS market are terrific
  • The amount of loans written off were $63 million in the quarter compared to $77 million in the first quarter of last year.


  • In the first quarter, repurchased 2.1 million shares totaling $150 million. Absent M&A opportunities, it's safe to assume that Wyndham will spend approximately $600 million this year on share repurchase.
  • Repurchase authorization of $476 million remains
  • Increased EPS guidance by $0.05 for the full year and diluted share count goes to 130 million shares reflecting the benefit of repurchases.
  • VAT impact in Q1 was $3 million or $4 million.
  • Foreign exchange negatively impacted quarterly results by $6 million due to the official exchange rate of Venezuela.

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Consensus estimates, management guidance and commentary, and questions for management in preparation for the earnings release/call tomorrow.




  • Total revenues:  $1.987 billion
  • EPS $0.52




RCL Q2 2014 EARNINGS PREP - rcl 



  1. What is the industry capacity increase in Europe for 2015? And RCL's European capacity in 2015?

  2. Is the European strength mostly coming from US sourced and Asian sourced customers -- or some other part of the World?

  3. Is Spain/UK still leading the way in European performance? 

  4. What about the impact from Israel/Gaza and Ukraine conflicts? Changes in Scandinavia/Russia deployments for 2015? Has the booking curve been more closer in for these itineraries?

  5. How are Celebrity's new onboard promotions doing?

  6. Is the Caribbean's heavy promotional state more of a demand or supply issue? 

  7. Which categories are driving onboard revenue growth e.g. casino, bar?

  8. Discuss early interest and booking activity for the new Australia based itineraries?





  • Continue to see strong yield growth on sailings in Asia even with the significant capacity increase in the region.

Onboard yields

  • Onboard yields... continued to see the benefits of fleet upgrades and onboard revenue management initiatives.

Booking volumes

  • Booking volumes have been accelerating. The past eight weeks have been much stronger, with bookings up more than 20% year-over-year. While the strong demand trends have been partially driven by promotions available for Caribbean sailing, RCL is also seeing elevated levels of quality demand for itineraries not being discounted. So as a result, book load factors and APDs for the year are higher than same time last year.
  • Demand from North America has been particularly strong at increasing prices and RCL already have more than 80% of their forecasted United States and Canadian revenue on the books.  This is considerably more than same time last year.


  • While RCL is seeing strong bookings for the Caribbean with recent booking volumes trending well above last year's levels, the environment remains very promotional.  The pressure on pricing has mostly been limited to seven night and shorter Caribbean itineraries as they are seeing continued yield growth on long Caribbean sailing.
  • Expect to see higher Caribbean load factors than last year during the summer. So, as Caribbean capacity for the industry is up more in Q2 than in all other quarters, it is subsequently where RCL expects to see their largest yield decline for the Caribbean.
  • Still expect Caribbean itineraries to be down slightly YoY.  RCL guidance expects continuation of our promotionally oriented Caribbean market environment for the remainder of 2014.


  • European sailings have exceeded expectations and are booked at significantly higher load factors and prices than the same time last year. Demand and pricing have been broadly strong for these itineraries with all key source markets trending ahead.
  • Finally starting to see a recovery in pricing from Southern Europe.  RCL expects European itineraries, which account for 22% of their capacity in 2014 to generate double-digit improvement versus 2013 and higher yields than 2008.
  • The percentage of guests booked on European sailings who have purchased their air through us has doubled year-over-year. An added benefit of our ChoiceAir program is that it increases the retention of the booking. Both our Mediterranean and Northern European products are at a higher book position than prior year and are driving elevated per diems with Mediterranean sailings doing particularly well.
  • One of the markets that RCL has been particularly pleased with is the Spanish market that seems to have picked up quite nicely. And seeing strength out of the U.K. and Irish market as it relates to pricing.


  • Continue to exceed both pricing and volume expectations. China sailings which represent about 1/3 of this capacity are expected to generate double-digit yield improvement.  This is in spite of a 30% year-over-year capacity increase in the market.
  • 2014 summer China season is booked far ahead of the same time last year at higher rates.

Quantum of the Seas

  • Currently in a very encouraging booked position in terms of both load factor and pricing


  • Alaska yields to increase in the low to middle single digit range and to be similar to yields in record 2011 season.


Consensus estimates, management guidance and commentary, and questions for management in preparation for the earnings release/call tomorrow.




  • Total revenues:  $649 million
  • EBITDA: $77 million
  • EPS $0.07




Q2 2014

  • Revenues:  $640.5m
  • EPS:  $0.06
  • EBITDA:  $75.9m

FY 2014

  • Revenues: $2.5138 bn
  • EPS:  $0.12
  • EBITDA:  $256.2m



  1. What's the latest on Sioux City? Shouldn't it be classified as discontinued operations?

  2. July trends?

  3. IL VGT competition is pressuring the brick-and-mortar casinos but should it ease as less and less new machines will be added later this year and in 2015?

  4. Penn National (PA) had an awful quarter on gaming revenues. Is the PA market coming to maturity?

  5. Any new initiatives on the Charlestown property ahead of Horseshoe Baltimore opening?

  6. If slots at racetracks are approved by voters this fall in Nebraska, would PENN look to enter the Council Bluffs market?
  7. Any more cost cutting left?
  8. Thoughts on MA referendum and hurdles to getting Plainville open? 




Business conditions

  • Consumer environment remains very challenged and fragile, similar to what PENN experienced the second half of 2013. Most notably, at the lower end work segments of the database below $100 where they continue to lose visitation and trips.
  • Are actually seeing some nice trends at the $400-plus segment (VIP segment)
  • Visits are down. Spend is largely either flat or, in many cases, up as you work up the database.  Newer markets are holding up fine, but some of the more mature markets are soft.
  • About 50% of the lowered guidance is two properties in particular - Lawrenceburg and Charles Town.

New Developments

  • Openings this fall of PENN's VLT racing operations in Dayton and Mahoning Valley, both in Ohio. They are right on schedule and on budget for early fall openings.
  • Started construction on Plainville in March and expect to open this facility in 2Q 2015.
  • Started construction with the Jamul Indian Village of PENN's development that is expected to open in the early part of 2016.

Corp expense

  • The 20% reduction year-over-year is sustainable for the remainder of the year.


  • Margins will hold at existing levels throughout the year

Maintenance capex guidance

  • $80 million for FY 2014


  • As recent as March of 2014, those video gaming terminals represented 27% of overall gaming revenue in the state and to the tune of $53 million in the month of March. So these are certainly acting as parasites on the bricks and mortar business in the state of Illinois and you will continue to see supply reduction consideration in markets like those and others where visitation trends continue to be a bit of a concern.

Tunica competition

  • A lot of that Memphis business previously visited the Tunica market 8 years ago. 
  • Arkansas clearly has taken a big bite out of the Tunica market

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