LEISURE LETTER (07/23/2015) - RCL, CCL


headline news

Macau June Visitation - The Statistics and Census Service (DSEC) reported the following visitation statistics for June:

  • Visitor arrivals totaled 2,248,281 in June 2015, down by 7.6% YoY and 11.8% month-to-month. 
  • The average length of stay of visitors increased by 0.2 day YoY to 1.2 days; overnight and same-day visitors had an average stay of 2.2 days and 0.2 day respectively.
  • Visitors from Mainland China decreased by (10.1%) YoY to 1,435,189; those travelling under the Individual Visit Scheme dropped by (4.2%) YoYto 644,207. 
  • Mainland visitors came primarily from Guangdong Province (632,449), Fujian Province (66,804) and Hunan Province (59,448). 
  • Visitors from Taiwan (80,272), the Republic of Korea (31,406) and India (21,428) decreased by (5.9%), (24.8%) and (3.3%) YoY respectively, while those from Hong Kong (523,789) and the Philippines (22,222) increased by 2.0% and 6.5%. 

LEISURE LETTER (07/23/2015) - RCL, CCL - 3



Takeaway: Soft visitation numbers across the board for June - continues to be a major hole in the Base Mass growth thesis promoted by the Macau bulls. 


July 23 9am:  PENN 2Q CC

July 23 5pm: BYD 2Q CC ; PW: 1397357

July 24 11am-2pm:  PENN Plainridge tour and investor day

July 28 8:30am: WYN 2Q CC ; PW: WYNDHAM

July 29 10:00am: HLT 2Q CC ; PW: 74328196

July 30 9:00am: HST 2Q CC

July 30 10:00am: MAR 2Q CC ; PW: 66506287

July 30 1:00pm: HOT 2Q CC ; PW: 69941686

August 1

  • Wild Rose Jefferson opens
  • St Regis Macau opens

August 4: 11:00am: MGM 2Q CC ; PW: 0575269

August 4: 5:00pm: AWAY 2Q CC

August 6: 8:30-1pm: RCL INVESTOR DAY (NYSE)


CCL - announces 6 ships will be based in China for 2016, increasing its capacity there by 58%.

  • 2 Princess ships: 1) Golden Princess ship to northern China, sailing out of Tianjin on a seasonal basis, with itineraries visiting a variety of desirable destinations in northern Asia; 2) Sapphire Princess, which has been homeported in Shanghai since 2014 and will start sailing year-round in China in 2016.
  • 4 Costa ships: Costa Fortuna, Costa Serena, Costa Atlantica, Costa Victoria

Takeaway: Before this announcement, Asia/Australia accounted for 13% of CCL's total capacity in 2016 - this number included 4 Costa ships and 1 Princess ship sailing out of China. 


CCL - Carnival Corporation signed an agreement with Port Authority of Barcelona to build and operate a new cruise terminal in Europe's largest port. 

  • The agreement with the Port Authority of Barcelona constitutes a more than 30 million euros investment to build and operate its second private cruise terminal at the Port of Barcelona, which is used by seven of the company's 10 cruise line brands as both a destination and home port. 
  • As part of the agreement, the Port Authority granted Carnival Corporation administrative concessions to operate the cruise terminal and all-new parking facility at Europe's largest port and the fourth busiest port in the world.
  • With the agreement, Carnival Corporation has been granted approval to begin the final design process and start construction of the new terminal in 2016. Scheduled to open as early as 2018 in the Port's Adossat wharf, the new terminal will be one of Europe's largest at 11,500 square meters.

RCL- A fire had been reported aboard a Freedom of the Seas but officials said it was quickly extinguished.  There were no reports of injuries. 



CIA/FBI Suspected Involvement in Macau - China suspected that US intelligence agencies were working with American owned casinos in Macau to trap and blackmail Chinese officials, an investigative report by The Guardian revealed today. 

  • The report marked with a warning that it was not to be introduced to mainland China, was uncovered by the Investigative Reporting Program at the University of California, Berkeley. It was among a trove of Sands documents filed with a Las Vegas court which is hearing a civil action by the former head of its Macau casinos who is suing for wrongful dismissal, the Guardian reports.
  • The report said that Sands Macao “is the primary subject” of claims by Chinese officials of collusion with US intelligence services.
  • “A reliable source has reported that central Chinese government officials firmly believe that Sands has permitted CIA/FBI agents to operate from within its facilities. These agents apparently ‘monitor mainland government officials’ who gamble in the casinos,” the report said.


Takeaway: We've heard the Macau (Beijing) government is not happy with disclosures taking place in US courts regarding Macau operations. LVS was reluctant to give any opinions on last night's call regarding potential Macau gov't actions with the smoking ban and transit visa. Is it related? 


Florida GGR June - Total: 3.12% YoY, SSS: 5.61% YoY 




Hedgeye Macro Team is incrementally bearish on U.S. consumption growth, based on the consumer's continued efforts to deleverage their household balance sheet combined with the peaking of consumer confidence and stagnating labor productivity.   

Takeaway:  For now, US regional gaming slowed in June but North American cruise pricing still doing well.

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