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Tickers: MGM, MAR, HOT, TVPT, MTN

EVENTS

  • Sept 12: SNOW F4Q14 11:30 am
  • Sept 16: Trump Plaza closes
  • Sept 17-18: Hedgeye Cruise Pricing Survey mid-Sept

COMPANY NEWS

2282.HK/MGM; 880.HK/SJM  (GGRAsia, Macau Business Daily) A group of casino workers from MGM China is reportedly meeting on Monday (September 15) with the city’s Labor Affairs Bureau to complain about the company’s pay policies.

Another protest by SJM employees will occur on Saturday. The gathering is set for 3:00pm, after which the demonstrators plan to march to the Lisboa and Grand Lisboa casinos.

Takeaway: Labor protests all over the place - labor costs will continue to rise

MAR – announced plans to expand its Autograph Collection portfolio in Europe with new additions in Zurich, Switzerland and Barcelona, Spain in the spring of 2015 with the new 245-room Kameha Grand Zurich and the 83-room boutique hotel, The Cotton House, Barcelona.

Takeaway: Growth via the lower management revenue affiliated properties channel. Barcelona remains one of the top global tourist destinations.

HOT –  announced plans to debut The Luxury Collection brand in California’s famed Napa Valley with Las Alcobas, a Luxury Collection Hotel, Napa Valley that will open in the fall of 2015 following a comprehensive multi-million renovation that will transform the former Grandview Hotel & Spa.

Takeaway: A good property and destination addition to The Luxury Collection for Starwood.

TVPT – Travelport files amended S-1; to offer 30M shares in range of $14-16/share through Morgan Stanley, UBS, Credit Suisse and Deutsche Bank. TVPT's principal shareholders include: Blackstone Funds and TCV Funds. 

Takeaway: "Redefining travel commerce"...more like an equity market bubble in our book. After all, what's new about yield management and SAAS?

MTN – announced that the company has acquired Park City Mountain Resort from Powdr Corp. for $182.5 million in cash, settled all aspects of the prior litigation with Park City Mountain Resort, and expects $35 million in incremental EBITDA in FY2015.

Takeaway: A great acquisition at a very inexpensive EBITDA multiple while also adding a new mountain to the EPIC Pass program.

Insider Transaction:

PNK – EVP, Secretary and General Counsel John A. Godfrey acquired 25,000 shares of the company’s stock (which were part of a stock option award) for $16.92 and then sold the same 25,000 shares for $27 on Tuesday, September 9. The transaction was part of a 10b5-1 plan adopted on March 13, 2014 and following the sale, Mr. Godfrey now directly owns 141,722 shares in the company and 50,000 additional options with an exercise price of $16.92/share that expire on May 16, 2015.

INDUSTRY NEWS 

Las Vegas Old is New – Paragon Gaming told the Nevada Gaming Control Board, The Rivera Casino is considering a $100 million renovation. The Riviera opened on April 20, 1955 as the first high-rise and the ninth resort on the Las Vegas Strip. Today, The Rivera has over 2,100 rooms and a 110,000 sq ft of gaming space. Paragon has operated the property for more than a year, following the departure of several Riviera executives. Riviera's ownership group includes Starwood Capital Group. 

Takeaway: The renovation of the north end of the Strip continues. 

MACRO

China Loan & Money Supply Growth

    • New yuan loans CNY702.5B vs CNY700B consensus and CNY385.2B in July
    • Loan growth +13.3% y/y vs +13.4% in July
    • Deposits +10.1% y/y vs +10.9% in July
    • Total social financing CNY957.4B vs CNY1.130T consensus and CNY273.1B in July
    • M2 +12.8% y/y vs +13.4% consensus and +13.5% in July

Takeaway:  Lending continues to be weak

China Auto Sales – According to the China Association of Automobile Manufacturers, Chinese drivers bought 1.5 million passenger cars in August, an increase from 1.35 million units in August 2013.

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.