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  • May 28: MGM Annual General Meeting: Proxy "Fight"
  • June 4: CCL special press announcement in NYC


Galaxy - operator Galaxy Entertainment Group Ltd will open its HKD19.6 billion (US$2.5 billion) Galaxy Macau Phase 2 property with over 200 gaming tables, said Richard Longhurst director of operations at Galaxy Macau. 

75% of the new 150 tables will be allocated to the mass market. “The 38 gaming tables that we borrowed during the renovation of Broadway Macau have been returned to the property, and they will be focused on the mass market,” Longhurst said. “The additional tables that we have are sufficient for the current market,” the executive said. 

According to Kevin Clayton, Galaxy’s Chief Marketing Officer, 95% of Galaxy's Ph2 investment has been non-gaming related. According to Clayton, percentage occupancy rates are “in the high 90s” and “the take up in the [new] hotels for the first few weeks of launch is already reaching a point where we’ve got demand that exceeds supply.” 


Takeaway: The 75/25 mass/vip breakout is confirmed. 

China Star - had “mutually irrevocably and unconditionally” agreed to terminate a deal to buy an equity interest in the profit stream from Macau junket operator Eight Elements Entertainment Ltd. China Star runs the casino at a hotel property called Lan Kwai Fong in downtown Macau, under a gaming licence from SJM Holdings Ltd.

Golden Group - VIP gaming promoter Macau Golden Group Ltd will cut labor costs by depriving its employees of their attendance bonuses, free ferry tickets and money meant to substitute for tips as of next month. An internal notice says this is meant to allow the company to keep operating effectively. Macau Golden Group has five VIP gaming rooms in the Hotel Lisboa and six in the Grand Lisboa Hotel.



Takeaway: These decisions were likely influenced by the tough VIP market conditions.


Migrant worker visa - The Macau government will tighten its control over migrant construction workers’ visas and cut their visa period to a maximum one-month stay after their assigned public work is complete. The Secretary for Economy and Finance, Lionel Leong, revealed on Saturday that the authorities will shorten the workers’ permitted period of stay, three months prior to the construction’s projected completion; the workers will then be requested to leave Macau within one month upon the completion of their duties.

Takeaway: This change will help reduce congestion in Macau. Little impact on Macau gaming operators.

Unions against smoking lounges - Seven associations representing casino workers in Macau have shown their support to a full smoking ban inside casinos, including the removal of smoking lounges. The associations are also calling on the government to implement a trade union law and the right to collective bargaining, said legislator José Pereira Coutinho.

Meanwhile, an association of junkets says it collected over 12,500 responses in a survey taken last week, where 99% of respondents believed that a full smoking ban will affect casinos’ business and agreed to have smoking rooms inside VIP gambling zones.



Takeaway: Consensus is that there will inevitably be a full smoking ban

Taiwan - A mainland Chinese official has threatened severance of the mainland’s direct links with the Taiwan-controlled archipelago of Kinmen if gaming is introduced there. The media quote the director of the mainland’s Taiwan Affairs Office, Zhang Zhijun, as saying during a visit to Kinmen that direct aviation, shipping and postal services between the mainland and the archipelago would be cancelled.

Consideration has been given to putting a casino on Kinmen, which is less than 10 km from the mainland city of Xiamen.


Takeaway: The road to gaming in Taiwan is not an easy one.

Singapore visitation - saw a 7.4% YoY drop in visitor arrivals for March 2015. Indonesia visitation tumbled 14% in March - 8th straight monthly decline. Malaysian visitation fell 5% in March.  Mainland Chinese visitation fell 21% in March, reversing the +16% growth in February.

LEISURE LETTER (05/26/2015) - 5 26 2015 8 39 53 AM

Takeaway: This is disconcerting. The reversal in Chinese visitation trend isn't surprising for March but declining local visitation (Malaysia/Indonesia) raises the question of how much longer can flattish mass revenue trends be sustained this year. 

Australia cruising - 

  • According to Cruise Lines International Association (CLIA) Australasia, number of Australian passengers rose 20.4% YoY to 170k - thereby achieving the industry's long-held goal to hit one million cruisers by 2020 six years early.

  • The equivalent of 4.2% of Australians took a cruise last year, ahead of the second ranked North American market, which has a market penetration rate of 3.4%. 

  • Rising from its number-five position in 2013 by overtaking Italy, Australia is now the fourth largest source market for cruise passengers, accounting for 4.5% of world cruisers, behind North America (54.2 per cent), Germany (8%) and UK/Ireland (7.4%).



Mainland China - will reduce tariffs on some imported consumer goods such as skincare products, Western-style clothes and disposable nappies, Reuters reports. The news agency quotes a written statement issued by the Ministry of Finance as saying import duties would be lowered by an average of over 50% on June 1.


Takeaway: Cheaper consumer goods coming to Macau

Singapore -

  • 1Q 2015 GDP growth of 2.6% beat Street estimates of 2.2%
  • April CPI fell 0.5% YoY, compared with the median expectation for a 0.1% decline based on a Dow Jones Newswires poll of five economists. In March, Singapore's CPI fell 0.3%.



Hedgeye Macro Team remains negative on 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.