TICKERS: MGM, G13.SI, AHT
EVENTS
- June 25 - AC tax bill
COMPANY NEWS
MGM - Celebrity cruises and MGM are in a partner deal. Starting on June 24, Celebrity’s Captain’s Club and MGM Resorts’ M life members can choose from offers throughout the year. These include complimentary cruises for qualified M life Platinum and NOIR members, and Captain’s Club members can enjoy benefits and special access at MGM Resorts’ destinations, including concerts, events, entertainment venues, restaurants and more.
Genting Singapore - Announced on Tuesday that they will be de-registering their wholly-owned subsidiary, North Spring Investments, LLC in Mongolia. According to the press release, the de-registration is not expected to have any material impact on the consolidated net tangible assets or EPS of the company.
AHT - Ashford announced yesterday they are planning to acquire the W Minneapolis and Le Meridien Minneapolis for $101 million.
- The 229-room W Minneapolis Hotel - The Foshay, and the 60-room Le Meridien Chambers Minneapolis hotel, put the transaction cost at $349,000 per key.
- The purchase price represents a trailing 12-month cap rate of 6.0% on NOI and a trailing 14.4x EBITDA multiple.
- On a forward 12-month basis, the purchase price represents an estimated cap rate of 7.0% on NOI and an estimated 12.5x EBITDA multiple.
MSC Cruises - MSC Cruises and Etihad Airways announced a new global partnership agreement that will benefit MSC Cruises’ guests traveling to Abu Dhabi and the UAE.
- Up for offer are “Fly & Cruise” packages from destinations around the world - with Etihad Airways or partner airlines in its network.
- Under the terms of the agreement, MSC Cruises’ guests will be able to fly to Abu Dhabi with Etihad Airways to cruise in the region in the Arabian winter. Guests will fly with the national airline of the UAE to their cruise during winter 2015-2016 on MSC Musica.
Silversea - Announced it is adding the following all-inclusive package amenities offered on all Silver Shadow Asia cruises in 2016:
- Free shore excursions
- Free Wi-Fi
- Roundtrip economy air travel and transfers
- Two-night, pre-cruise hotel stay
The all-inclusive packages are available for new bookings made on or after June 24, 2015 on 17 cruises, including, for example, a seven-day voyage to Indonesia, Thailand, and Malaysia. Sailing roundtrip from Singapore on February 6, the cruise starts at just $4,550 per person.
INDUSTRY NEWS
Macau REVPAR - Maria Helena de Senna Fernandes, director of the Macau Government Tourist Office, said she expects the city’s hotel occupancy rate to improve in the coming months. Hotel occupancy rate stood at 83.9% in May, down 6.4 YoY. Ms Senna Fernandes said she expects room prices to fall with the opening of new hotels. In May, the average room rate in Macau was MOP1,485 (US$186), down by 7.5%.
Takeaway: May REVPAR in Macau looks very weak and it could get worse in the coming months. Bad news for room rate operators like LVS.
Broken tooth - Famed gang leader known as Broken Tooth Koi has reportedly opened a VIP gaming room in Macau.
Macau-Guangdong Investment - Leong said on Thursday he hoped that through today’s meeting with Guangdong officials the two sides could reach an agreement on the framework for the local government’s plan to invest part of its huge reserves via the Guangdong government.
- Leong said the government planned to invest about 10 billion to 20 billion patacas of Macau’s financial reserve.
- He said the government was looking to invest in projects related to infrastructure or undertakings that will improve Macau people’s living conditions as that would be more acceptable to the local population.
Macau Housing - The slump in gaming in Macau is beginning to depress the city’s housing market. The news agency quotes estate agent Jones Lang LaSalle Inc as forecasting that housing prices will drop by 15% this year, the first annual fall since 2008.
Korea Tourism - Air passenger arrivals to South Korea from neighboring China increased 28% YoY to 1.69 million in May, show official data from South Korea published on Wednesday.
- Additionally, a weakening in Japan’s currency the yen contributed to a 22% YoY in air passengers on South Korea-Japan routes. There were 1 million such travelers in May, according to the data from the Ministry of Land, Infrastructure and Transport.
- For June: The overall number of air travelers in the South Korea market plunged 19.5% YoY in the first three weeks of June, with the drop in international air passenger traffic hovering at about 20% since June 16, according to ministry data.
Takeaway: MERS certainly affected travel.
Europe - European cruise destinations such as Santorini, Lisbon and Oslo suffered dwindling visitor numbers and spending last year for the first time in a decade as Americans cancelled trips to the Baltic and Mediterranean over geopolitical concerns.
- Visits to European ports of call were down 7 percent after almost 9 percent growth a year earlier, a report issued by the Cruise Lines International Association (CLIA) on Thursday showed.
- Passengers and crew spent 3.64 billion euros ($4.08 billion)at ports in Europe last year according to the report, 4.2 percent less than in 2013.
- The number of Europeans booking cruises remained stable at 6.4 million in 2014 as declining bookings in Britain, Italy and Spain -- partly affected by weak economies -- were offset by a growing number of bookings in Germany.
Takeaway: We believe European struggles were extended into 2015 as confirmed by CCL and RCL.
New Bedford, MA - City residents overwhelmingly approved the proposed construction of the $650 million Foxwoods-managed resort casino for New Bedford's waterfront. The referendum passed Tuesday with 73% voting in favor of it and 27% against, according to results posted on the city's website.
New Jersey - A new poll finds most people from New Jersey don't want casino gambling in other parts of the state beyond Atlantic City. The poll released Wednesday finds 56% opposed to casinos somewhere other than Atlantic City, and 37% in favor.
Ohio - The Ohio Supreme Court must decide whether a group can file suit against the state for allowing video lottery terminals at horse racing tracks and other policy decisions related to voter-approved casinos.
- At issue is whether the conservative American Policy Roundtable and a dozen other plaintiffs have legal standing to challenge gambling-related legislation and executive actions.
- The American Policy Roundtable and others say the video slots amount to casino-style gambling that has not been OK’d by voters, and the net proceeds from the devices are not being devoted to educational purposes, as stipulated under the state constitution.
- The video lottery terminals “were neither contemplated nor included in the definition of ‘lottery’ used in ... the Ohio constitution,” the challengers say in court filings." The operation of such devices exceeds the constitutional authorization to conduct a lottery.
MACRO
Hedgeye Macro Team remains negative on Europe
Takeaway: European pricing has been a tailwind for CCL and RCL but a negative pivot has happened in 2015.