LEISURE LETTER (01/20/2015)

TICKERS: MAR, NCLH, RCL

EVENTS

  • Jan 29:  PENN 4Q CC
  • Feb 2: Cod Manila Grand Opening
  • Feb 3:  GLPI 4Q CC

COMPANY NEWS

David Group - closing 3 VIP rooms (Four Seasons, L'Arc, and MGM Macau). The closures allow the company to expand abroad  The three rooms will close on January 31 while the others will continue to operate as usual. In 1Q 2015, David Group will open VIP operations in Manila (Philippines), Da Nang (Vietnam), and Jeju (South Korea) respectively.” 

Takeaway:  David Group will continue to wind down their business in Macau but they are not pulling out.  The operators can use those leftover tables in their new properties.

 

Resorts World Manila - Phase 3 of Resorts World Manila, owned by Travellers International, will have additional gaming space. There will also be additional hotel capacity in Phases 2 and 3. A total of PHP6 billion (US$134.4 million) of the PHP16.8 billion net proceeds raised by Travellers International in an initial public offering in 2013 had been spent or earmarked for extensions to the Resorts World Manila casino resort as of December 31. A further PHP259.8 million from the IPO proceeds has been set aside for general corporate purposes, added the filing.

Article HERE

 

MAR - opened more than 46k rooms in 2014. For 2015, company expects more than 1 million rooms open or under development.

Takeaway: MAR's 2014-2017 goals included opening 200-235k new rooms. 2014 new room growth was a slow start but that should pick up in 2015. 

 

NCLH - Norwegian Getaway will be used as a floating hotel in 2016 in Rio de Janeiro, Brazil 

Article HERE

 

RCL Royal Caribbean Cruises Ltd. (RCCL) will launch a new Internet-based reservations system for retailers in March called Espresso, its first complete upgrade since it introduced CruiseMatch in 1990. It will be used by all of the RCCL brands, including Royal Caribbean International, Celebrity Cruises and Azamara Club Cruises. Espresso enables agents to compare up to four potential bookings at one time. Espresso will be optimized for mobile phones and tablets, which is important to home agents visiting clients, said Vicki Freed, Royal Caribbean’s senior vice president of sales.

Article HERE

 

SilverSea -  SilverSea has launched ‘ultra-inclusive' pricing for all Mediterranean cruises this year. For new bookings made on or after 15 January 2015, fares will now include WiFi and shore excursions.

Article HERE

Takeaway: Could 2015 be the year of the add-ons? Many cruise lines are offering them, even luxury ones.

INDUSTRY NEWS

Gaming tax  Secretary for Economy and Finance Lionel Leong Vai Tac said Sunday that the results of the government’s mid-term review on the gaming industry this year would determine if it’s necessary to adjust the gaming tax upon the renewal of the city’s gaming concessions.

Takeaway:  We don't think a gaming tax hike is likely but it does add another thing to worry about.

 

Gaming task force Macau government announced on Monday the establishment of an interdepartmental task force on the gaming industry. The main goal is to address the issue of potential job layoffs in the sector.  The government however stressed that up to Monday, it had only received one case of workers being laid off by a junket operator.  So far in January, the gaming regulator had received one request from a junket operator to have its licence cancelled. 

Takeaway:  It would be political suicide for any concessionaire to lay off workers. Meanwhile, the junket community may continue to shrink.

 

S'pore self-barring – Singapore’s National Council on Problem Gaming (NCPG) is to study the feasibility of allowing whole groups of people to apply to be barred from the city’s gaming resorts under the city-state’s casino self-exclusion program.  The groups under consideration are local (i.e., non-foreign) workers and self-identified members of religious groups.

 

As of end-2014, the number of casino self-exclusions stood at almost 191,000, up by 6.3% QoQ, according to data from NCPG.  Over 90% of casino self-exclusions involved foreigners, according to the council.  

Article HERE

 

2 new SK casinos – South Korea said it will approve two more casino resorts and the building of around 5,000 new hotel rooms this year, hoping to boost tourism investment by around 3.5 trillion won (S$4.3 billion). The government would choose operators to invest around 1 trillion won each in two integrated resorts with foreigner-only casinos by the 2H 2014 - part of a three-year plan to boost the economy.

Article HERE 

 

Vietnam approved a $4 billion resort on Phu Quoc Island that would include a casino with 2,000 slot machines and 200-400 roulette tables. In addition, the resort would have conference centers and an international five-star hotel with 3,000 rooms.

Takeaway: A win for the suppliers

 

Wisconsin Hard Rock – According to WISN-TV, Gov. Scott Walker is close to reaching an agreement with the Menominee Indians to build their $800 million Hard Rock casino in Kenosha. Walker said the "biggest stumbling block" is trying to reach a deal that would not result in the state having to refund $100 million in potential lost revenue to the Potawatomi Tribe if the Kenosha Casino moves forward.

Article HERE 

Takeaway: This would be bad news for the Chicago-area casinos.

MACRO

China Q4 GDP - 7.4% growth vs consensus of 7.2%

 

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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