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headline news

NCLH- Star NCLC and TPG Viking Funds, two of NCLH's major shareholders, plan to sell a combined 12.5m ordinary NCLH shares in a secondary offering.

Star NCLC, a Bermuda company, is a wholly owned subsidiary of Genting HK. Genting HK owns NCLH’s ordinary shares indirectly through Star NCLC. Genting HK is currently NCLH's largest shareholder, with a 25% stake. Following the sale, its holdings would go to 22.1%. TPG Viking Funds' stake, meanwhile, would go to 4.3% from 7%. Apollo, with a 24% share, will become NCLH's principal shareholder.

Norwegian will not sell any ordinary shares in the offering and will not receive any of the proceeds from the offering. The total number of Norwegian ordinary shares outstanding will not change as a result of the offering.

LEISURE LETTER (03/06/2015) - AB


Takeaway:  While it wasn't entirely unexpected, this has been a risk for NCLH. The question is whether Genting/TPG will continue selling shares later this year.


WYNN - Forefront of Macau Gaming (FMG) Cloee Chao said Wynn Macau sent a text message to all dealers and supervisors on Wednesday morning, reminding them that ‘there are a small number of day-off quotas available for applications for the morning, afternoon and night shifts on between March 9 and March 15.’

Ms. Chao told Business Daily that it was the first time Wynn Macau had encouraged workers to take unpaid leave since the financial tsunami of 2008.


Takeaway: Can't fire but gotta reduce costs

LVS - A Las Vegas judge ordered First Cagayan Leisure & Resort to pay LVS $2 million for using the Sands trademark and another $150,000 fine for violating copyright laws. The complaint says the websites falsely affiliate themselves with the Las Vegas Sands Corporation to lure prospective gamblers to overseas online casinos.


MGM - will break ground on Springfield casino on March 24

WYNN - Elaine Wynn has launched a bid to retain a seat on the board, who is trying to oust her. 

Takeaway: The official statement for an upcoming board fight. We think the Wynn board has a point - there is a conflict of interest

Mohegan Sun - plans to add a $120 million, 400 room hotel tower. Mohegan says this project would help it recapture 500,000 potential room nights it turned away last year.


RCL - Celebrity's 'Spring into Savings' promotion is available on more than 300 sailings with savings of up to $1,000 per booking. Plus, vacationers who choose a standard veranda stateroom in Europe, or Concierge Class, AquaClass and Suite Class accommodations in Europe and other destinations, will receive the all-inclusive offer—free classic beverage package, free gratuities and up to $300 to spend on board.

For a total combined value of up to $3,000, travelers must book during March.

'Spring into Savings' is available for a limited time on new individual and select group reservations made through March 31 for sailings from May 2015 to April 2016.

Takeaway: Note this promotion is geared towards European itineraries.

RCL - For 2016, Harmony of the Seas will sail the Caribbean from Port Everglades, Oasis of the Seas will shift to Port Canaveral and Bermuda will get calls from its first Quantum-class ship, Anthem of the Seas.

Oasis of the Seas and Allure of the Seas will sail a western Caribbean and two new eastern Caribbean itineraries in summer 2016, all seven nights from Port Everglades. Allure of the Seas will then be joined by the new Oasis-class ship, Harmony of the Seas, to offer a seven-night eastern and western Caribbean itinerary for winter 2016-17.

Oasis of the Seas, meanwhile, will reposition to its new winter home of Port Canaveral in central Florida, where a new terminal is being built to accommodate it. Oasis will alternative weekly eastern and western Caribbean cruises. And Rhapsody of the Seas will take over three- and four-night Bahamas cruises from Enchantment of the Seas, which shifts to Miami.

Takeaway: Caribbean will be more crowded and competitive in 2016

CCL - Seabourn Encore maiden voyage sells out in 2 days

Takeaway: Strong luxury demand is still there


Macau liaison chief - Central People’s Government Liaison Office Director Li Gang said in Beijing on Thursday that the gaming industry must not be sacrificed in return for economic diversification. Li Gang pointed out that the government will conduct a review of the gaming industry from the middle of this year.

Li Gang also said that the tightening of visa restrictions and the ongoing anti-graft campaign in the mainland were not necessarily the main reasons for the current drop in gaming revenue. However, he admitted that the central government’s anti-corruption drive did indeed deter some government officials from visiting Macau.
Li Gang said that economic diversification required a big effort from the government since it was “too easy” to earn money from the gaming industry. He also said that the local economy’s diversification would take between 20 and 30 years to complete, adding that the local government should strengthen its efforts to achieve this long-term goal.


Takeaway: Probably positive comments on the margin: gaming will not be sacrificed and the diversification timeline is long

Macau Gaming Employment Stats - At the end of the fourth quarter of 2014, the Gaming Sector had 58,524 persons engaged, up by 3.4% YoY; there were 25,752 dealers, up by 2.0% YoY.   

In December 2014, average earnings (excluding bonuses and allowances) of full-time employees stood at MOP20,680, up by 8.2% YoY. Average earnings of dealers amounted to MOP18,000, up by 7.7% YoY.

Job vacancies totaled 841 at the end of 4Q 2014, down substantially by 1,145 YoY. There were 180 vacancies for dealers, down significantly by 884.


Takeaway: Employee costs will be higher again in 2015, despite the downturn.

Japan-  Lawmakers in Japan are optimistic that a bill to create the framework to legalize casinos in Japan will be passed this year. However, they also agree that a major obstacle may still be the cautious stance of the Komeito Party, a key coalition member.

The administration of Prime Minister Shinzo Abe has already announced its support of the concept as a means to stimulate growth in the Japanese economy. The drafting of the bill is said to be at an advanced stage.

It is thought that there will be no visible progress until after the completion of the unified local elections on April 26, but thereafter the Abe administration would introduce the bill and seek to pass it in the current ordinary Diet session, scheduled to end on June 24.

Takeaway:  Passage of Japan gaming is considered a long shot this year

Atlantic City - Golden Nugget has increased its budget for promotional gaming credits since four casinos closed last year. The average customers per day have risen from 3,000 to 5,000 said GM Tom Pohlman.

Horse racing - Handle on horse races fell 3.7% to $763.4 million in February, while the total number of races fell 3%, Equibase reported. For the first two months, handle is down 1.1%.

Takeaway:  Horse racing hasn't done as well as the commercial casinos so far this year.

South Coffeyville, OK - The Cherokee have opened their $10 million casino in South Coffeyville. The casino has 300 slots.

IRS - The proposal, released this week by the IRS, suggests the reporting rules for winnings from gambling on slots, keno and bingo be reduced from $1,200 to $600. The agency set a 90-day period for the casino industry to respond to the suggested regulation changes.


Florida -  Florida Lottery announced that Scratch-Off ticket sales for the week ending March 1, 2015, exceeded $91.7 million, the highest, single-week Scratch-Off sales of any lottery in the country.  

Takeaway: Florida's Instant ticket sales was hot in 2014 and is off to a great start in 2015.

Hotel openings - Lodging Econometrics reported that new hotel supply growth bottomed in 2011 with the opening of only 347 Hotels/37,404 Rooms. Since then, new supply growth has been slow and incremental. New Hotel Openings were a paltry 412 in 2012, 488 in 2013 and 557 hotels with 63,352 rooms in 2014.

LE forecasts that just 726 new hotels will open in 2015 and 797 hotels in 2016. The sharpness of the decline and the prolonged nature of the economic malaise delayed the rekindling of hotel development and continues to cause sluggish supply growth.

LEISURE LETTER (03/06/2015) - a

Takeaway: Hotel supply growth will be kept under control in the near future


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.