LEISURE LETTER (04/27/2015)

TICKERS: RCL

 

EVENTS  

  • April 28 (4:30pm) - WYNN 1Q CC: ; pw: 20173922

  • April 29 (1:00pm)  -  HOT 1Q CC: ; pw: 17589434

  • April 29: New Hampshire House vote on 2 casino bill (SB 113)

  • April 30 (9:00am) - HST 1Q CC:

  • April 30 (10:00am) - MAR 1Q CC: ; pw:  99597993

  • April 30 (5:00pm) - BYD 1Q CC: ; pw: 3858748

  • May 4 (11:00am) - MGM 1Q CC: ; pw: 1535291

  • May 5 (11:00am) - HYATT 1Q CC ; pw: 17020089

  • May 7 (8:30am) - MPEL 1Q CC ; pw: MPEL

HEADLINE NEWS

Macau March visitation - March 2015 visitation fell 14% YoY, the worst comp since July 2009. The decline was steeper for Mainland China visitation which dropped 18%. The decline was most pronounced in Beijing, Zhejiang and Tianjin. Guangdong visitors also fell 10% YoY in March.

DATA HERE

 

LEISURE LETTER (04/27/2015) - 1

 

LEISURE LETTER (04/27/2015) - 2

 

Takeaway: LVS confirmed that base mass is now in sharp decline - down 21% YoY in Q1 for the company.  Now we know that visitation was at least partly to blame.  This is a damaging statistic for long term bulls.

COMPANY NEWS  

Summit Ascent - Summit Ascent, a company controlled by Lawrence Ho, registered losses of HK$78.9 million in 2014, a reduction of HK$600,000 compared to the previous year when the company’s losses amounted to HK$79.5 million. According to the filing of the Group with the Hong Kong Stock Exchange this figure was primarily “attributable to non-cash share-based compensation benefits of HK$84.2 million”.  The opening of the integrated resort in Primorye, Russia is nearing completion and slated to open this year.  The casino is expected to have 25 VIP gaming tables, 15 mass-market baccarat tables and 800 slots.

ARTICLE HERE


Equinox- Equinox Holdings, the New York company that runs Equinox fitness clubs is launching a hospitality brand intended for health-conscious travelers willing to pay for high-end fitness facilities and amenities while on the road. 

Equinox expects to open its first hotel in 2018 at Related Cos.’ Hudson Yards development under way on Manhattan’s west side. The hotel’s Yabu Pushelberg-designed property will include indoor and outdoor swimming pools and at 60,000 square feet, the largest ever Equinox gym, the company says. A Los Angeles hotel is slated to open in 2019.

 

Equinox eventually expects to open as many as 75 hotels world-wide. Related, which is the company’s majority owner, expects to invest or raise “several billion” dollars for Equinox hotels over the next few years, a Related spokeswoman said.

ARTICLE HERE

Takeaway: The idea isn't new but with the recession behind us in the US, why not? The luxury customer is alive and well.

 

RCLRoyal Caribbean's Majesty of the Seas is in an unexpected dry dock, prompting the cancellation of the ship's next cruise, which was slated to depart Monday. RCL spokeswoman Cynthia Martinez says repairs will "resolve an issue that is causing a small amount of bio-friendly oil to leak."  

 

Passengers booked on the subsequent sailing -- a four-night Bahamas cruise from Miami, scheduled to depart April 27 -- will receive full refunds, as well as future cruise certificates equal to 100 percent of the cruise fares paid for the canceled voyage.

ARTICLE HERE

Takeaway: Another ship incident for RCL. No wonder legacy (pre-2006) ship pricing stinks.

INDUSTRY NEWS

Control tourist measure - A new measure intended to alleviate crowd congestion in popular tourist spots will be tested during this week’s Labour Day holiday, Secretary for Social Affairs and Culture Alexis Tam Chon Weng said.  

 

Tam said one of the suggestions he proposed was that the China National Tourism Administration (CNTA) and the Macau Government Tourist Office (MGTO) co-operate in managing the number of IVS arrivals during peak travel times. He added that while the central government agreed with his suggestions, it would have to talk to relevant entities in the mainland before any of the proposals could be implemented.

 
Tam said that in the meantime MGTO officials will test tourist flow control measures during the three-day Labour Day holiday which begins on Friday.

 

According to Tam, visitors entering from the mainland will receive SMS messages alerting them of overcrowded tourist spots, in the expectation of diverting them to other areas. He said he was confident that the measure will see positive results. 

ARTICLE HERE

Takeaway: You don't really need control if visitation is falling.

 

Junket watch - US-based International Union of Operating Engineers (IUOE) has sponsored the launch of a website called Macau Gaming Watch. The organization, which claims to represent over 2,000 stationary engineers in Nevada and previously launched the now-defunct website CasinoLeaks-Macau, calls the new site “independent” and “critical,” and aims for it to be “the first-stop source for people investigating gaming in Macau." 

 

The new site has released information on Macau junkets and VIP gaming operators, including the “Neptune Guangdong Group” and “Hoi Fong” Entertainment. Drawing on the “recent tumult” in Macau’s gaming industry, the IUOE said that it is now expanding its research to explore more elements of the industry. “The site will initially look into Wynn Macau’s junkets. However, we will later explore the junket/VIP operators at other casinos as well,” it says.

 

The IUOE, declaring itself a shareholder of Wynn Resorts Ltd, has also launched a website called Cotai Land Deal. The site has presented its ongoing research as a real estate transaction of the Wynn Macau’s Cotai land, with key documents and findings.

ARTICLE HERE

 

New Hampshire - Gov. Maggie Hassan on Friday afternoon changed her position and announced her support for legislation that would allow for two casinos in New Hampshire. The casino bill is up for a vote Wednesday by the New Hampshire House. Activists on both sides of the issue said Friday they are expecting a close vote, with neither side predicting victory.

 

The legislation on Tuesday was amended by the House Ways and Means Committee to delay the licensing of a second casino until at least one year after the completion of a performance audit of the first casino. The bill initially allowed for a simultaneous licensing process.

 

SB 113 would permit two casinos – a large casino of 2,000 to 3,000 slot machines and 80 to 160 table games that would require a minimum investment. And a casino of 750 to 1,000 slots and 25 to 80 tables requiring a $125 million investment. 

ARTICLE HERE

Takeaway: This is the closest NH has been on legalizing casinos and could provide a little spark to very weak slot demand.

 

Oregon - The Oregon House on Thursday waved along legislation targeting state-sponsored video gambling, approving a bill that would map out Oregon Lottery terminals in relation to each location's "socioeconomic status." HB 3317 now heads to the Senate About 2,500 retailers, according to state data, offer video gambling.

ARTICLE HERE

Takeaway: This study, if approved, may result in some VLT reduction in Oregon.

MACRO

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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