LEISURE LETTER (5/15/2015)

Tickers:  RCL

headline news  

Skill-based gaming -

  • A bill backed by Nevada’s gambling equipment manufacturers that would allow slot machines to add a skill-based, arcade-style element to the game has been approved by both legislative chambers and awaits the governor’s signature.  AGEM Executive Director Marcus Prater said Gov. Brian Sandoval had expressed early support for the bill as part of his platform to keep Nevada as the hub for the world’s gambling technology.
  • Under the concept, gamblers could play a slot machine with an 88% payback, but the figure could jump to 98% if the player was proficient in a video game skill element that would be part of the bonus round, such as shooting down enemy airplanes or outracing other players in a road race.

ARTICLE HERE

Takeaway: This could be a monumental change for the slot industry and for domestic gaming, and the first step starts with Nevada. Generation X and younger do not play slot machines.  This could be the catalyst for video game generations to try slots.

COMPANY NEWS  

BEE - closed on the sale of the Four Seasons Austin Hotel for $197m (291 guest rooms)

Takeaway: $677k average price per room for this luxury property.

 

RCL - Royal Caribbean International plans to raise the suggested daily gratuity amount on its cruises from $12 to $12.95 per person. Cruise Critic members also are reporting that Celebrity Cruises will raise its recommended gratuity guidelines.

 

DIS - After announcing last month that it is launching river cruises through a partnership with AmaWaterways, Adventures by Disney has already added two more departures "due to popularity and mass interest in the program."

Originally, Disney’s tour operator arm said it would offer four sailings along the Danube River during summer 2016, and one holiday-themed sailing in December 2016. There will now be five sailings in the summer, as well as two sailings in December of 2016. The itineraries will travel through Germany, Austria, Slovakia and Hungary.

ARTICLE HERE

Takeaway: River cruises are doing well in Europe and will continue to pressure ocean cruise liners there.

INDUSTRY NEWS

Hotel price peak - hotel prices in the U.S. were just 1% point short of their pre-recession peak, according to Moody’s/RCA Commercial Property Price Indices (CPPI) report, indicating that values can’t go much further.  Moody’s reported that hotel prices rose by 33% over the past 12 months, as property fundamentals improved and more and more investors flooded into the sector. 

ARTICLE HERE 


 

MACRO

China April new yuan loans CNY707.9B vs consensus CNY950B and CNY1.180T in March

  • Loan growth +14.1% y/y vs +14.0% in March
  • Deposits +9.7% y/y vs +10.1% in February
  • Total social financing CNY1.05T and CNY1.18T in February
  • M0 +3.7% y/y vs +6.2% in February
  • M1 +3.7% y/y vs +6.1% in February
  • M2 +10.1% y/y vs consensus +11.9% and +11.6% in February

Takeaway: Weak loan data for April. Bad for the VIP business in Macau.

 

Singapore new private homes sales jump 83% in April - Data from the Urban Redevelopment Authority (URA) on Friday (May 15) showed developers sold 1,124 housing units last month - well above the 613 units sold in March and 390 units in February. April's sales were the highest since May 2014, when developers sold 1,488 units.

ARTICLE HERE


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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