LEISURE LETTER (08/07/2014)

Tickers: PENN, NCLH


  • Aug 7:
    • Revel Auction Proceedings (POSTPONED)
  • Aug 8:
    • CHH 2Q 10am: , pw: 30848466
    • DRH 2Q 10am: , pw: 153358818
    • AHT 2Q 11am:
    • SHO 2Q 12n:
  • Aug 11:
    • HPT 2Q 1pm:
    • CZR 2Q 4:30pm: 844.231-441, pw: 55917191
    • STN 2Q 430pm
    • HTHT 2Q 9pm: , pw 7103 4558
  •  Aug 12:
    • HMIN 2Q 9pm: , pw HOME INNS

  • Aug 14:

    • Revel Auction Proceedings


PENN – Hollywood Gaming at Mahoning Valley Race Course to open Sept 17

  • The $250 million development

  • 850 VLTs

  • Will celebrate a second grand opening on Monday, Nov. 24, when thoroughbred racing begins on the new one-mile all-weather racetrack. 

  • Will be open 24/7

Takeaway:  Opening on schedule. Should open much stronger than PNK's Belterra Park. PENN's new racinos are located in much less competitive areas than BP. CEO buying stock this week a good sign of management's faith in new properties.

CWN:AU – (Bloomberg) Crown's new Las Vegas Strip development with Andrew Pascal will potentially cost as much as $4 billion.  Beyond the Las Vegas development, Crown is currently pursuing a AUD1.3 billion casino hotel in Sydney scheduled to open in 2019 while also working on projects in Brisbane and Sri Lanka.  

Takeaway: Costly development. New supply as a positive is being rolled out again as an investment positive by MGM management.


GENT:MK – Despite the unsuccessful attempts by Resorts World Miami to secure a gaming license (whether a transferred slots license or a newly issued license), redevelopment of the Miami Herald site continues. Malaysia-based Genting Group purchased the 14-acre newspaper site in 2011 for $236 million. Genting also purchased surrounding properties, including the Omni Mall, and announced plans for a sweeping $3 billion Resorts World Miami luxury casino with multiple towers, stores and an elevated beach and lagoon.

Takeaway:  Until gaming is approved, Genting will use its Miami foothold as a stepping point for its growing Resorts World Bimini casino operation.


NCLH (Seatrade Insider) – No Pride of America change so far as Hawaii readies for 2 hurricanes 


Revel Atlantic City – (Bloomberg) The auction proceeding for Revel AC Inc was postponed one week - from today until August 14.  The delay is to allow time to analyze the "multiple purchase offers".  As a result, Revel will also likely postpone the August 8 hearing for sale approval until August 18.


SLS Las Vegas – the operators of the north Strip hotel-casino were recommended for licensing approval by the Gaming Control Board. The 1,600-room resort, a redevelopment of the Rat Pack-era Sahara, is scheduled to open Aug. 23.  Gaming regulators approved the license application for Stockbridge Real Estate of San Francisco and SB Gaming, a subsidiary that will manage the SLS Las Vegas. The Nevada Gaming Commission will make a final ruling on the application on Aug. 21.

Takeaway: Another private equity firm recommended for a Nevada gaming license.  The list of licensed private equity firms is growing.


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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