• It's Here!

    Etf Pro

    Get the big financial market moves right, bullish or bearish with Hedgeye’s ETF Pro.

Here are the BYD notes from our Las Vegas trip last week

Las Vegas Locals:

  • BYD doesn't think the unemployment level matters as much as consumer confidence
  • People have adjusted
  • They believe that they are at a bottom
  • We were surprised they weren’t more negative on this market given current economic factors

New supply in LV Locals:

  • M resorts, Cannery East, Red Rock, South Coast, Aliante. (Cannery, Aliante, M resorts)
  • There is little change in the promotional environment other than some more free play.  There has been a rational response to M coming online
  • Going forward, there is not a lot of new stuff coming online

Blue Chip:

  • It is too early to tell about Firekeepers. It is likely to steal a lot more business from Four Winds as it is within an hour from their property
  • Competition is as rational as they could hope.  Wouldn't want to open the tower in this economy and they aren't getting the return they want

Borgata/AC:

  • MGM in AC - If MGM has to exit - they may not want to buy the other half of Borgata. They can't buy the other half without causing some covenant issues/amending existing agreement
  • Impact from PA - There is very little impact from Bethlehem.  Table games will probably have an impact on them
  • AC - Revel won't be good for them. They think that the timeline laid out was aggressive
  • There is $20mm of dividend payments from Borgata annually

Stations:

  • They are very interested in Stations
  • Offered $950 million on the OpCo – can do that under the existing financing
  • Timing is uncertain – they have an exclusivity period of 120 days

Echelon

  • Pretty buttoned up on capex
  • They had $90mm to payout and it’s mostly done
  • No deadline to do anything there – need an economic recovery and with it, clarity on what is happening on the Strip
  • $700mm was of construction costs incurred on the property

Capex:

  • They are still buying slots
  • Spending 50mm on maintenance (used to be 120mm) – slots was 50% of that but now it is more than 50%
  • They can maintain the lower level of capex for 2 years
  • Properties are very fresh and there is no need to increase the level of capex at present
  • All cash is going to pay down debt
  • Final payment on Danai Jai Alai – $47m + interest will be made in Q12010

Credit facility:

  • May 2012 – maturity of bank line
  • Going out beyond 2012 for a bank line is too expensive
  • They will leave the credit facility in place for now

Acquisitions:

  • No fixed multiple for an asset
  • One problem is that they can't buy anything cheap

Downtown:

  • Still a good niche operation
  • $700-$1,500 package deal from Hawaii
  • It is difficult to steal from the downtown market because everything is cheaper there - harder to relocate
  • 3Q - will not be an easy comp but 4Q will be
  • For downtown - need to see fuel indices

Louisiana:

  • Never really participated in the bubble
  • Oil prices are helping. Delta downs - had easy comps due to the hurricane
  • They are doing creative marketing
  • Treasure Chest – there is more competition. Plus Katrina money is leaving. Business is derived almost exclusively on a local basis; there is no hotel at the property

General commentary:

  • It’s all about spend-per-visitor
  • It’s just a question of confidence
  • Non-rated business got hurt the most - lower priority. They are higher margin customers too