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Tickers:  GALAXY, ISLE, NCLH, CCL, RCL

EVENTS

  • July 30: 
    • MGAM 2Q call:
    • MAR 2Q call 10am : , pw: 59383825
  • July 31:
    • HST 2Q call 10am:
    • BEL (OEH) 2Q call 10am: , pw: 68627603
    • H 2Q call 11:30am:  , pw: 21721745.
    • BYD 2Q call 5pm:  , pw: 2654057
  • Aug 1:
    • HLT 2Q 10am: , pw: 67361605
  • Aug 5:
    • BEE 2Q 10am: , pw: 73605986
    • RHP 2Q 10am:
    • MGM 2Q 11am: , pw: 1985444
  • Aug 6:
    • HT 2Q 9 am:
  • Aug 7:
    • MPEL 2Q 8:30am: , pw: MPEL
  • Aug 8:
    • DRH 2Q 10am: , pw: 153358818
    • SHO 2Q 12n:

COMPANY NEWS

27:HK Galaxy – On Tuesday, more than 500 Galaxy hotel and casino workers signed and delivered a petition to Galaxy's corporate office requesting/demanding an increase in salaries.

Takeaway: This labor discord follows a similar move from casino dealers and floor workers at Sand China Limited.  Both labor protests are supported by the Macau Gaming Industry Frontline Workers union.

577:HK Louis XIII – received approval from the Macau government for its building plans for a boutique casino hotel on the Cotai-Coloane border. Louis XIII will include 66 gaming tables (50 premium mass and 16 VIP) and 236 hotel rooms and villas all of which are at least 2,000 square feet (186 sq. m.) or larger.  The property, scheduled to open in mid-2016, will also include a 38-seat L’Ambroisie restaurant.  At present, the company believes it has sufficient funding to complete the project based on the April 2014 loan facility of up to HKD3.05 billion with a mainland Chinese bank and the HKD3.2 billion gross raised in its initial sale of shares in February 2013.  Louis XIII will operate under an SJM subconcession.

Takeaway: The first and only destination casino and hotel reserved for "by invitation only" guests. This probably means management got the wink wink that they will be allocated tables.

ISLE – Jim Perry, a former CEO of Isle of Capri Casinos, has resigned as a board member from ISLE.  Until recently, Mr. Perry was Executive Chairman of ISLE's Board of Directors. 

Takeaway: Pretty quick news after Perry stepped down as Chairman.

CRUISE PROMOTIONS:

NCLH – introduced an all-inclusive program at $899 per person.  This could potentially double agent commissions on 7-day cruise trips.  The all-inclusive package includes the Ultimate Dining package, the Ultimate Beverage package, shore excursion credit of up to $200 per person, pre-paid daily service charges, a 250-minute Internet package per person, 20 photos of any size, chocolate-covered strawberries, a bottle of wine, one bingo session, and up to 12 bottles of water.  The promotion, which starts August 4 and runs through August 29, is valid for all sailings in 2015 except Pride of America cruises.

CCL (SeaTrade)  Holland America Line brought back 'Explore 4' savings program with benefits including a free Signature Beverage Package and free Pinnacle Grill dinner for passengers booking an ocean-view or higher category stateroom, free or reduced cruise fares for third and fourth guests in the same stateroom on select sailings and 50% reduced deposits.

RCL (TTG Digital) –  Royal Caribbean has announced a new agent incentive, giving away a £250 Jamie’s Italian restaurant voucher every day throughout August.  The incentive is designed to celebrate the launch of the line’s new all-inclusive campaign, with guests who book a cruise between August 1 and September 30 on applicable sailings enjoying free select drinks packages, soda packages for kids and free gratuities.

 

Hapag-Lloyd  As an introductory offer for all international guests, Hapag-Lloyd Cruises has announced an ‘on-board beverage credit’ of up to €200 for alcoholic and non-alcoholic drinks.  The credit will be graded according to the length of the cruise.  It will apply to all new bookings on board luxury ship Europa 2 and expedition ship Hanseatic, starting August 1, 2014 and applies to cruises operating after October 1, 2014.

INSIDER TRANSACTIONS:

PENN - COO Jay Snowden purchased 9,920 shares at an average price of $10.32/share and an additional 2,580 shares at $10.45/share. Mr. Snowden now owns 21,306 shares.

LHO - CFO Bruce A. Riggins sold 11,000 shares on Monday, July 28 at an average price of $36.13 per share and now owns 36,020 shares.

RHP - CEO, President & Chairman Colin Reed acquired the final 23,193 shares at $16.47/share sold the same shares at $49.007/share on July 28 from his stock option award compensation. This was the final transaction related to both his stock options and the 10b5-1 trading plan.  Mr. Reed now owns 790,017 shares and units as well as an additional 225,793 shares via family trusts and partnerships.

WYN - EVP and Chief HR Officer, Mary Falvey sold 22,233 shares on July 25, 2014 at average price $78.0634 per share and now owns 51,291 shares as well as 57,810 restricted stock units granted under the Wyndham Worldwide Corp 2006 Equity & Incentive Plan.

RCL - Director William L. Kimsey sold 10,075 shares of stock on Monday, July 28th at an average price of $63.00 and now directly owns 13,037 shares of the company’s stock.

INDUSTRY NEWS

Macau Package Tours and Hotel Occupancy Rate for June 2014 DSEC

Visitor arrivals in package tour increased by 15% YoY to 908,000 in June 2014. Visitors from Mainland China totaled 723,000, up 17%, with 244,000 coming from Guangdong Province.  Visitors from Taiwan (59,000), Hong Kong (36,000) and the Republic of Korea (27,000) recorded year-on-year increase; besides, visitors from Japan (16,000) surged by 81%.  There were 99 hotels and guesthouses operating at the end of June 2014, providing 28,000 guest rooms, down by 1% YoY; 5-star hotels accounted for 66% of the total supply, with 18,000 rooms.  The average length of stay of guests held stable as June 2013, at 1.3 nights.

Takeaway:  Hotel visitors remain steady

Macau ETGs, slots or tables – A Macau Professor, Zeng Zhonglu of the Gaming Teaching and Research Center at Macao Polytechnic Institute, suggested Macau gaming operators may wish (need) to consider using more hybrid, electronic table games which feature more seats (player stations) as a means to challenge the table cap limit. He also indicated such devices should be counted as slot machines.

Takeaway: Table caps versus ETGs.  It only makes sense to us that  electronic/hybrid games must play a great role on gaming floors. 


Colorado Racino Expansion – This November, Coloradans will vote on a State referendum to allow racinos in Mesa, Pueblo and Arapahoe counties. If the referendum passes, one casino with 2,500 slots would be allowed in each of the three counties.

Mohegan Sun Commentary – during the financial review call, the group offered a number of interesting comments we thought we'd share with our clients

  • Competitors have become less rational. Foxwoods has increased free I slot play by 44 percent, while Mohegan increased its free slot play 3.7 percent. Etess said marketing
  • July EBITDA is up very nicely from last year.
  • Massachusetts repeal referendum. Polling shows the referendum to repeal casinos will not succeed.
  • REITs. Emergence of the REIT structure in gaming is good for Mohegan Sun as Mohegan could be a good operator for a REIT-owned casino. It fits into Mohegan’s asset-light strategy.

Takeaway:  More evidence of a better July performance

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.