LEISURE LETTER (03/13/2015)



  • March 16-19: Cruise Shipping Miami Conference
  • March 19: Galaxy FY 2014 results


MGM - announced staff pay rises equivalent in some cases to a percentage above the city’s rate of annual inflation for 2014.


For non-management workers at MGM Macau earning up to MOP12,000 (US$1,500) per month, the new increment is between 6%-8% of monthly salary. The casino operator said in a statement it amounted in many cases to approximately MOP700 per month per worker for those in that wage bracket.


MGM Macau workers earning more than MOP12,000 per month will receive an increment of 5% of monthly salary. All the awards are effective from March 23, the company said.


Takeaway:  More wage increases for MGM China due to higher inflation. 


SJM - CEO Ambrose So has denied that the casino operator is compelling employees to take unpaid leave because it has insufficient work for them to do during the gaming slump, Macao Daily reports.


The Chinese-language newspaper quotes So as telling reporters in Beijing that SJM Holdings employees are free to decline its offer of unpaid leave. But they will also not rush to recruit as vacancies occur as before as one of the ways to decrease cost.


An internal memorandum circulated among SJM Holdings employees invites them to apply for unpaid leave. So also said his company had no plans to lay off employees.


So told reporters that SJM will not file an application with the government to apply for gaming tables for their new Cotai project Lisboa Palace this year.


The application will only be submitted once the construction of the project is completed. He claimed that SJM is able to shift gaming tables from its other properties to the new project.

In addition, So revealed that the corporation has financial reserves of some MOP24 billion, claiming it does not have any financial difficulty even though the city’s gaming revenues have dropped for nine consecutive months.


Predicting that gaming revenues may still post decreases of 10-15% YoY in 2015, Mr. So stressed once more that he is optimistic about the development of the gaming industry, claiming that the opening of the Hong Kong-Zhuhai-Macau Bridge will attract more gamblers, especially from Hong Kong.



Takeaway: After recent comments from Secretary Leong, no casino operator will force unpaid leave. Operators will need to think about other cost-cutting measures. 


LVS - Sands China recommended a final dividend of HK$1.00/share for 2014 year. It will be paid on July 15.


PNK - elected Chuck Atwood to Board of Directors. Atwood is currently the Lead Trustee of the board of trustees for Equity Residential (NYSE:EQR), a REIT listed on the New York Stock Exchange and member of the S&P 500.  He is also a member of the board of directors of Gala Coral Group, a private U.K.-based gaming company, and ALST Casino Holdings, LLC, a private Las Vegas-based gaming and hospitality company.


Suncity- Suncity is interested in Phú Quốc, an island that is part of the southwest Vietnam province of Kiên Giang, and about 250 kilometres (155 miles) from Ho Chi Minh City.  Suncity also said it was willing to invest in Bai Truong if the current investors withdraw.



STR: US hotel results for week ending 7 March:

  • Occupancy rose 0.5% to 64.5%
  • ADR increased 2% YoY to $116.74
  • REVPAR was up 2.5% to $75.27  


Takeaway: US REVPAR growth have been slower recently.


AC FEB SS land GGR: -2% YoY

AC FEB I-gaming revenue: flattish at $10.4m



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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