LEISURE LETTER (03/30/2015)


CZR - CEO Loveman said on CNBC, "Things in Vegas are getting better." The gambling mecca "is more buoyant, in large part because supply has been stable now for some time, demand patterns are improving, the convention and meeting business is robust," Loveman said. "We've enjoyed a great start to March Madness, which is always a good time for us."



Galaxy- Francis Lui Yui Tung, vice chairman of Galaxy, said, "You cannot expect that from now on all the profit growth you [Macau operators] have enjoyed for the last 10 years is going to continue… So personally, I think, [that] you have to adjust yourself to make sure that in the next 10 years’ time you will be equally profitable.”  “We used to have 38 tables at Grand Waldo, so the initial plan is that we could bring 30 tables back in,” stated the executive.


Asked about reports that Macau government proposals to amend the Individual Visit Scheme (IVS) system of inbound visas for mainland travelers to Macau had been submitted to Beijing, Lui said: “I have no information that ideas on the IVS policy have been sent to Beijing. I have been reading in the newspaper that there are talks we should review the IVS policy, making sure it is not going to interrupt the lifestyle of the citizens of Macau. I do agree you can’t forever keep pumping people in here [Macau]. I think you have to encourage quality customers to come into Macau and make sure there is a balance [of locals’ interests and visitor interests].”


Takeaway: A new normal is here for Macau. Galaxy Ph2 may only get 150 tables.


AMAYA - sold Cadillac Jack to AGS for C$476 million comprising cash consideration of C$461M, subject to adjustment, and a C$15M Payment-in-kind Note, bearing interest at 5.0% per annum and due on the eighth anniversary of the closing date.  Sale is anticipated to close in 2015.


Landing - Landing International Development Ltd confirmed that negotiations for the company to acquire the foreigners-only Alpensia casino at Holiday Inn Resort in Pyeongchang, South Korea, have ended without a deal. “Some of the conditions set out in the…sale and purchase agreement had not been satisfied or waived and no extension of the long stop date had been agreed; hence, [the] sale and purchase agreement lapsed on 28 February 2015,” the company said in a filing on Friday.



SGMS - announced that the El San Juan Resort & Casino, a Hilton Hotel in Puerto Rico, has selected an array of Bally systems and games products to upgrade and enhance the property's overall gaming and entertainment experience. 


As part of this technology upgrade, El San Juan Resort & Casinowill also install 56 new Bally-branded slot games, including the award-winning Pro Series Wave cabinet and such premium titles as 88 Fortunes, Michael Jackson Wanna Be Startin' Somethin'TM, The Magic of David CopperfieldTM, TITANIC, and ZZ Top Live From TexasTM. The casino operator is also installing Scientific Games' Shuffle Master Blazing 7s blackjack progressive side bet as part of its technology upgrades.


Graft - Two senior officials with Macau’s Marine and Water Bureau are under investigation on suspicion of accepting bribes to commit illegal acts, the city’s Commission Against Corruption  said on Saturday night. Both of the officials, who were not identified, have been taken off public duties, the commission said in a statement. The pair have also been restricted from leaving Macau.



Japan - Prospects for legalizing casino gambling in Japan suffered another blow on Monday as proponents said they would delay a bill allowing "integrated resorts", as the ruling coalition remains divided on the controversial measure.


Pro-casino lawmakers had said last week they would resubmit a previously failed bill by Tuesday, the end of the fiscal year. But they backed away from that plan on Monday as efforts continued to get the backing of the junior partner in Prime Minister Shinzo Abe's coalition.


Takeaway: Could be nail in coffin


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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