LEISURE LETTER (03/16/2015)

TICKERS: LVS, IGT, RCL, CCL

EVENTS

  • March 16-19: Cruise Shipping Miami Conference
  • March 19: Galaxy FY 2014 results
    • (), Passcode: 712943

COMPANY NEWS  

LVS - The St. Regis Macao, expected to open during the third quarter of this year at Sands Cotai Central, is looking to recruit 700 employees. The luxury hotel brand held its first job fair in Macau on Friday. The St. Regis will offer 400 guest rooms and suites, as well as dining venues. 

ARTICLE HERE

Takeaway: St. Regis is expected to open Aug 1, 2015.

 

IGT - High 5 Games is suing IGT alleging breach of contract, trademark infringement and unfair competition stemming from their 2012 licensing agreement. The suit alleges that IGT failed to pay royalties on 81 games that use High 5 content, including features like super stacks, tumbling reels and split symbols.

 

RCL - Could Ovation of the Class be sailing to China?

 

LEISURE LETTER (03/16/2015) - rcl  ovation

 

Takeaway: Two Quantum class ships in China would prove RCL's short-term and long-term commitment to that risky but potentially lucrative market opportunity. 

 

CCL - Agents have given a resounding thumbs-up to P&O’s newest ship Britannia, with some suggesting it could help the line attract a new clientele.  

  • Phil Evans, managing director of Cruise Nation: “I think it’s also going to appeal to a slightly younger audience that P&O tends to attract. They usually tend to get people in their late 50s, but I think this will appeal to people in their 40s."
    • “I do think Anthem will be perhaps be more family orientated, but the staff at my agency have all said that they feel this signals a new era for cruising for P&O.”
  • Ann Anglesea, managing director of Delmar World in Wrexham: “The size of the ship was noticeable – [at 3,647 passengers] it’s a much bigger ship than we’ve been used to.
    • “It is beautiful, but the ambience of a ship depends on the clients that you have onboard, and I wonder if P&O will be reaching out to a different market share than they have previously had.
    • “I think P&O have got it right. The Retreat area looked exceedingly nice, and the specialty dining will appeal to higher end customers, but the prices are competitive in the market place. Whether there’s enough in the market to fill it though will remain to be seen.”

ARTICLE HERE

Takeaway: More praise for Britannia. Attracting a new clientele is a stretch. We are concerned about pricing power for the older ships as the Southampton cruise supply revs up.

 

 

INDUSTRY NEWS

 

Super anti-graft bureau - China is preparing to establish a ‘super’ anti-graft bureau that will investigate high-ranking officials suspected of corruption, Procurator-General Cao Jianming said. The plan for the bureau has already been approved by the central government, said Cao, who heads the country’s Supreme People’s Procuratorate. The new bureau will be staffed by several dozen experienced senior prosecutors and will strengthen the Supreme People’s Procuratorate’s anti-corruption capacities.

ARTICLE HERE


Proxy-betting - proxy betting in Manila could "represent as much as 50%of VIP revenue in Manila, versus 5%-10% to in Macau.” (Morgan Stanley).

ARTICLE HERE

Takeaway: We have also confirmed Suncity adding junket rooms in Solaire and CoD Manila later this year. This is good news for CoD Manila. We will be getting additional color on the Philippines market later in the month.

 

Jeju Air-  the leading South Korean budget airline is targeting Chinese gamblers deserting Macau due to the crackdown on corruption initiated by the People’s Republic of China Government, the company’s Chief Financial Officer, Kim Tae Yoon, said. In order to attract Chinese tourists the company is offering popular liquor and cosmetics onboard to lure Mainlanders to Jeju Island, where the company is based. The South Korean island has seven casinos where only foreigners are permitted to gamble.

ARTICLE HERE

 

Cyclone Pam - Several cruise ships have been forced to alter South Pacific

itineraries to avoid category 5 Cyclone Pam which has devastated the island nation of Vanuatu. Cunard’s Queen Elizabeth and Queen Victoria and P&O Cruises’ Aurora, all on world cruises, have had itineraries altered in the region. Holland America Line’s Oosterdam was forced to miss a call into Port Vila in Vanuatu on Friday and instead spent a day at sea to avoid the weather front. 

Other companies forced into making itinerary changes include Carnival Cruise Lines, Celebrity Cruises, P&O Cruises Australia and Royal Caribbean International.

ARTICLE HERE

 

 

MACRO

Singaporre private home sales - was nearly halved in February from a year earlier. Developers sold 382 units last month, compared with 739 units in February 2014, according to data compiled by the Urban Redevelopment Authority.

 

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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