• It's Here!

    Etf Pro

    Get the big financial market moves right, bullish or bearish with Hedgeye’s ETF Pro.

  • It's Here


    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.



  • June 9: ISLE F4Q 2015 CC


HOT/HST - HOT sells The Phoenician, a Luxury Collection Resort, in Scottsdale, AZ to HST for $400m.  Under Host’s ownership, The Phoenician will undergo a complete renovation.

Takeaway: Assuming the multiple is right, should be a good transaction for HOT by getting rid of a property needing substantial capex and standing by its asset-light strategy. Price per key on the transaction is ~$622k. HOT will continue to manage the property and fees will go higher when renovation is complete.


SGMS - has signed a new contract with Norsk Tipping (the "Lottery"), the National Lottery of Norway, to provide instant games and related marketing services. Awarded through a competitive procurement process, the three-year contract began January 29, 2015 and may be extended by the Lottery for an additional term.Scientific Games currently supplies Norsk Tipping with gaming system and retail technology.  Total sales were 26.9 billion Norwegian Kroner in 2014.

HT- acquires St. Gregory Hotel & Suites in Wash DC for $57m. Based on the company’s underwriting assumptions, the company anticipates the purchase price reflects a forward economic cap rate and EBITDA multiple of 7.0% and 12.9x, respectively. 

WYNN - Steve Wynn was in Kazakhstan May 25, apparently pitching resort ideas. According to media reports, Wynn met with President Nursultan Nazarbayev about possible joint projects in the central Asia country that is trying to develop casino resorts. One project, Tengri Resort, already is under construction near the city of Almaty.


Junket layoffs - A trade union leader says two Macau gambling junket operators will together lay off about 400 employees this month.  Forefront of Macau Gaming VP Lei Kuok Keong said David Group told its staff that it will close two VIP gaming rooms, but did not tell them which.  Lei estimates that the closures will cost nearly 100 jobs.  Lei said Neptune Guangdong Group intended to lay off 300 employees but keep all its VIP gaming rooms open.

According to the official website of David Group, it has two VIP rooms respectively in MGM Macau and Galaxy Macau, with another two in Wynn Macau. The union vice-head estimated that the imminent closure of David Group will lead to nearly 100 gaming workers losing their job.


Takeaway: VIP business may see further compression in June, maybe at MGM and/or WYNN.

Macau May visitation - Macau Government Tourist Office (MGTO) Director Maria Helena de Senna Fernandes said that based on data from the travel and hotel sectors the number of visitor arrivals in May is believed to have risen compared to March or April. The city’s tourism chief also said she was confident that the number of visitor arrivals in the second half of the year will be “stable”.


Takeaway: If Maria is correct, visitation for May will show growth following YoY declines in March and April

Singapore visitation - visitor arrivals fell 3% in April 2015, 14th consecutive month of declines.  A bright spot was Mainland Chinese visitation which rose 22% on a super easy comp of -43% (Malaysian Airline 370 disappearance on March 8th); however, sequentially, visitation gained 18%. 

Mass segment - Indonesia/Malaysia-  visitation continued to fall.  Indonesia visitation dropped 10% YoY in April, a 9th straight monthly decline. Malaysian visitation slipped 5%, similar to March's performance.  

LEISURE LETTER (06/09/2015) - 6 9 2015 8 11 30 AM

Takeaway: While visitation declined again in Singapore, the strong uptick in Mainland visitation was a positive surprise in April.

Smoking ban - David Chow acknowledged that implementing a full smoking ban could hurt gaming revenue. The casino tycoon recalled that competition within the gaming industry is high, and other jurisdictions across Asia and other parts of the world still allow smoking inside casinos. “We need to see whether it’s good for competition. This is a special industry."


Health Bureau raises MERS alert level to high - Macau’s health authorities raised their response to the Middle East Respiratory Syndrome (MERS) from a standard alert to a high-level alert yesterday evening, as the virus’s outbreak in South Korea was regarded as placing neighboring regions at greater risk.  The number of inbound passengers from Korea to Macau is estimated at 500 to 700 every day, most of whom disembark from a total of three direct flights.


Takeaway: Will MERS affect visitation?

MD removing slots for tables - Over the past 15 months, Maryland’s three largest casinos — Maryland Live, Horseshoe Casino Baltimore and Hollywood Casino Perryville — have kicked 1,350 slot machines to the curb. That’s a 16% cut to their slots to make room for more table games, restaurant space, entertainment and other amenities, all of which are increasing in value to casinos as interest in slots slides, particularly among millennials.


 Takeaway: MD removing slots ahead of MGM's Prince George opening in 2016. Pressure from a high slot tax rate may be at play here.

Regional gaming revenues - 

  • LA SSS: -0.3% YoY (vs HE projection of +1%)
  • OH SSS: -3% YoY

Takeaway: More evidence that May may end up flattish on regional revenues.


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.