LEISURE LETTER (02/04/2015)

TICKERS: CCL, HOT

EVENTS

  • Feb 10: 
    • IGT extraordinary shareholder meeting vote
    • HOT 4Q CC 10:30am
      • (1866) ; pw: 67514695
  • Feb 12: 
    • MPEL 4Q CC 8:30am
      • (1866) ; pw: MPEL
    • PNK 4Q CC 10:00am
      • ; pw: 68847867
    • BYD 4Q CC 5:00pm
      • ; pw: 5378350
  • Feb 17: MGM 4Q CC 11:00am
    • ; pw: 8870181
  • Feb 18: 
    • HYATT 4Q CC 11:30am
      • ; PW: 62845475
    • MAR 4Q release 5pm
  • Feb 19:
    • HST 4Q CC 9:00am
  • Feb 25: Prestige analyst day (9:00am-12pm)

    COMPANY NEWS

     

    CCL - Carnival Vista will homeport in Miami. The move is part of an extended deal between Carnival Corp. and PortMiami that would require Carnival to sail Vista out of Miami for at least 24 months in the three years after the ship launches next year. The 3,954-passenger Carnival Vista will launch May 1, 2016. After a season of 18 sailings in Europe, the ship will embark on a 13-night transatlantic crossing October 21, 2016, arriving in New York City on November 3. 

    Article HERE

    Takeaway: As expected.


    HOT - Bahrain-based International Investment Bank (IIB) has announced that its mixed-use real estate development in Sarajevo has signed a memorandum of understanding (MOU) with Starwood Hotels and Resorts concerning the project's second tower, which would house a luxury five-star hotel. Sarajevo City Centre (SCC), which is based in Sarajevo, the capital of Bosnia and Herzegovina, is a partnership between IIB and Saudi-based business group Al Shiddi Group.

    Article HERE

    INDUSTRY NEWS

     

    Macau

     

    Jimei – The company says it is expanding its gambling junket business in Macau. Jimei told the Hong Kong Stock Exchange that it had an agreement with New International Club Ltd to participate indirectly in the gaming promotion business in the city. New International Club is in negotiations with casino operator Wynn Macau Ltd about managing several VIP gaming rooms. The agreement will give Jimei all New International Club’s share of the revenue from these rooms in exchange for taking all the risk.

    Article HERE

    Takeaway: More VIP rooms coming for WYNN? 

    North America


    Alaska– The Alaska market may have found its perfect supply and demand scenario, as market capacity will remain flat year-over-year from 2014 to 2015 according to the 2015-2016 Cruise Industry News Annual Report. The market accounted for 900,000 passengers in 2014, and 2015 numbers remain the same, although still somewhat below a peak of 1 million passengers in 2008, before the infamous Alaska head tax drove 20 percent of the beds elsewhere.

    Article HERE

    New York - Again, NYC set a record for visitors, drawing 56.4 million of them in 2014. The total was a 3.9% increase over the 54.3 million visitors in 2013, which had been the all-time high for the city. The number of international visitors grew 7%, to 12.2 million. Domestic visitors totaled 44.2 million, a 3% increase. Also a city record: 32.4 million hotel room nights sold. The average daily rate was $295 and average hotel occupancy was 89% — both highs in the U.S. for 2014, said the city’s tourism organization, NYC & Company.

    Article HERE

    Takeaway: NYC was a hot spot for lodging in 2014 but Fx will be a hurdle in 2015?

    MACRO

    China PBOC announces system-wide reserve ratio cut by 50bp to 19.50%.  

    • Cut reserve ratio by additional 400 bps for agricultural development bank.
    • PBoC said it will continue to implement prudent monetary policy.
    • Maintain an appropriate degree of credit and social financing.

    Takeaway:  Largely expected by the market. Nevertheless, this is a positive for the VIP segment, on a 9-11 month lag.

    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.