LEISURE LETTER (01/14/2015)

TICKERS: SJM, NCLH

EVENTS

  • Jan 14:  AC Dec Revs
  • Jan 15:   LA Dec Revs
  • Jan 29:  PENN 4Q CC
  • Feb 2: Cod Manila Grand Opening

COMPANY NEWS

SJM –Nearly 100 workers from Palacio Lisboa, a restaurant inside Hotel Lisboa, complained to the Labour Affairs Bureau yesterday that they had been overworked in the past yet had not been compensated by the company.

Takeaway:  Prostitution ring Monday, now wage pressures. Hotel Lisboa has a lot on its hands.

 

Pollard Banknote Limited/KONAMI 

  • Kansas:  Launched on September 3, 2014, Kansas Lottery's $5 Frogger instant scratch game has sold in leaps and bounds—after only ten weeks on the market, it became the Kansas Lottery's highest selling $5 instant scratch game since 2005, and reached a remarkable sales index of 238! The proven sales-driving Frogger brand, published and licensed by KONAMI, is available to lotteries exclusively through Pollard Banknote.
    • Meanwhile, the Kansas Lottery reported $245m in sales for FY 2014 (ending June 2014) - second-largest annual sales amount and nearly $1 million above the previous year’s total.
  • Michigan: For FY 2014, the Lottery’s instant ticket sales reached $914,000,000— up 11% YoY, far exceeding the average U.S. lottery instant sales growth by almost threefold over the same time period.  The Lottery’s success can be attributed to a number of factors, including leveraging Pollard Banknote’s sales driving portfolio of instant ticket product innovations and growing its range of technology enabled products that extend the life of traditional instant tickets. In February 2014, the Lottery introduced its $30 instant ticket price point with the launch of $2,000,000 CA$H—a ticket that featured the sparkle and shine of Pollard Banknote’s patented Scratch FX®. Offering premium instant games at a higher price point proved to be a valuable strategy for the Michigan Lottery, as $30 instant ticket sales accounted for more than 9% of total instant sales in FY 2014.

 Takeaway:  2 jurisdictions (KS, MI) with momentum for Pollard Banknote

 

Red Lion Hotels – has entered an agreement to sell its Bellevue, Washington, hotel for US$35.4 million to an affiliate of Wig Properties. 

Takeaway:  $196k per key for this midscale property.

 

Crystal Cruises – kicking off its 25th Anniversary year by reporting significant booking revenue – nearly 80% of its budgeted outlook.  Looking ahead to 2016, for which the line is reporting 40% of maximum bookings, guests can save up to $5,950 per person on Crystal Serenity’s 102-day world cruise that follows a route round trip from San Francisco featuring segments to/from Sydney, Bali, Shanghai and Tokyo.  Until March 2, when fares are set to increase, all-inclusive luxury cruise fares start at just $1,730 per person.

Article HERE

Takeaway:  Crystal confirms other commentary we're hearing that Wave has gotten to a good start on the bookings side.

 

NCLH – key features unveiled on Regent Seven Seas Explorer (launching July 20, 2016)

  • Massive two-bedroom suite with built-in spa and eye-popping price: $5,000 per person per day
  • 10 categories for passengers to choose from, starting with the entry-level 407-square-foot deluxe veranda suite, which includes a living area and sleeping quarters. According to Robin Lindsay, executive vice president of ship operations for Regent, more than 60% of the ship's suites are 470 square feet or larger. Additionally, 70% of the balconies have 50% more depth than is typically found on Regent ships, which translates to balconies of almost 10 feet deep in 70% of the suites.
  • The line's popular restaurants return on Seven Seas Explorer, including Prime 7 Steakhouse (kudos for the gorgeous bar in which you can dine if you so choose) and the casual Veranda Cafe, with its elegant evening version, known as Sette Mari at La Veranda.
  • The Constellation Lounge, Regent's main theater, will host a wide range of activities, from cooking classes in the morning to concert recitals and theatrical performances at night. This theater features beautiful color schemes that can change at whim and hand-blown Murano glass lamps for a cozy feel. The Observation Lounge, with its "Great Gatsby"-inspired decor evokes a modern take on the roaring 20s.

Article HERE

 

Bohai Ferry – Acquiring the Costa Voyager was Bohai Ferry’s first step into the cruise business, renaming her Chinese Taishan and finding a unique deployment by sailing out of Yantai.  General manager of Bohai Ferry, Li Zhan, explained they expect to run their single vessel for a year before looking at more tonnage.

Article HERE

 

MSC – With four new ships on order through 2019, MSC Cruises may be intending to pick up three options between STX France and Fincantieri, taking them through 2022. When MSC’s double-order at Fincantieri was placed in 2014, the Italian cruise line said it had an option for one additional ship. Prior to that, MSC signed with STX France for two ships, plus an option of two more.

 

In today’s MSC Sinfonia drydock release, MSC said: “MSC Cruises currently carries roughly 40,000 guests per day, but by 2022 will double its capacity to 80,000 guests a day – 3.4 million per year – once the Renaissance Program is completed and the last of seven planned ships is delivered.”

Takeaway:  Build, build, build philosophy intact for MSC

INDUSTRY NEWS

Xi –Chinese President Xi Jinping warned the war on corruption was far from over, despite the country's many achievements.  The CPC had dealt with cases implicating corrupt high-ranking officials -- such as Zhou Yongkang, Xu Caihou, Ling Jihua and Su Rong -- which showed the world that the CPC was not scared of taking a "self-purifying" approach, according to Xi.  Xi Jinping told discipline officials that "strong remedies must be used to cure the illness" of corruption.

Article HERE

Takeaway:  Xi reiterating his hard stance on anti-corruption

 

Pacman vs Mayweather –  Promoter Bob Arum told Yahoo Sports on Tuesday that Manny Pacquiao has agreed to terms for a May 2 bout with Floyd Mayweather, and that the only thing in the way of the long-awaited fight occurring is Mayweather's approval. Unconfirmed sources say the fight may be on May 2 at the MGM Grand Garden. 

Article HERE

Takeaway: Big win for MGM if fight happens at the Arena

MACRO

Hedgeye Macro Team remains negative Europe, their bottom-up, qualitative analysis (Growth/Inflation/Policy framework) indicates that the Eurozone is setting up to enter the ugly Quad4 in Q4 (equating to growth decelerates and inflation decelerates) = Europe Slowing.

Takeaway:  European pricing has been a tailwind for CCL and RCL but a negative pivot here looks increasingly likely in 2015. 


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