LEISURE LETTER (10/7/2015)

TICKERS: MPEL, MAR, HLT, CCL

EVENTS     

  • Oct 8: Hedgeye Macau call 2:30pm
  • Oct 8: Tigre de Cristal opens

headline news

MPEL -  Rumors are circulating that MPEL’s Studio City could be allocated 250 tables versus generally accepted consensus of 150. We had been hearing that the floor was configured for 110 mass and 40 Premium/Direct tables but MPEL will no doubt welcome the additional capacity.

Takeaway: This is good news for Studio City and likely WYNN and MGM who will also open large Cotai facilities. The additional table supply may not be welcomed by Galaxy, LVS, and SJM.

COMPANY NEWS 

MPEL -  Melco Crown announced that it is set to offer a pre-­opening promotional package to Studio City visitors called the “Star Experience.” Package includes:

  • An overnight stay for two in the Star Tower, two tickets to ride the iconic figure-­of-eight Ferris wheel. 
  • A pair of tickets to the Batman Dark Flight Adventure. 
  • The package also includes a buffet breakfast and access to the pools and gym at the resort.
  • Prices for the promotional package start from HKD1,698, and the package will remain available until the official launch of Studio City on Oct. 27.

ARTICLE HERE

Takeaway: And they may have a 250 table allocation to work with versus expectations of 150. Stay tuned...

 

MAR -  Announced yesterday Marriott expects to increase its Caribbean and Latin American distribution between by 75% between 2015 and 2018 including a tripling of the company's presence in Brazil with the addition of 11 new hotels in that market.  

  • Marriott has 93 hotels open today and more than 60 hotels under development in the Caribbean and Latin America, including 11 new hotels across 6 cities in Brazil.  
  • Marriott has plans to invest approximately $400 million Brazilian Reals ($100 million) in Brazil to launch 4 of its modern essential brands: Courtyard by Marriott, Residence Inn by Marriott and Fairfield Inn by Marriott and AC by Marriott.  
  • Seven of these eleven planned hotels are already under construction, which will be owned by Marriott or Brazilian partners.  Over time, Marriott expects to sell its owned hotel assets, retaining long term management agreements.

ARTICLE HERE

Takeaway: Despite this move, MAR will still have over 70% of its room count based in the U.S.  MAR is one of our best ideas (LONG) heading into the end of 2015 and into 2016. 

 

HLT - Announced that eight new hotels will join Canopy by Hilton’s portfolio of more than 20 neighborhoods in various stages of development. Launched last October, Canopy by Hilton is Hilton’s newest hotel brand.  The Canopy by Hilton neighborhood additions include:  

  • Canopy West Palm Beach
  • Canopy Denver | Downtown
  • Canopy Washington, D.C. | Southwest Waterfront
  • Canopy New Orleans
  • Canopy Dallas | Uptown
  • Canopy Baltimore | Harbor Point
  • Canopy Minneapolis | Mill District
  • Canopy Chicago | The Loop

ARTICLE HERE

  

CCL - Fathom, a new Carnival Corp. cruise line focusing on voluntourism, has released the full pricing structure for its fares, which initially went on sale in June.

  • Sailings include itineraries to both Cuba and the Dominican Republic on a single ship -- P&O's Adonia -- feature four cabin types: insides, outsides, balconies and suites. Prices range from $974 per person for an inside cabin in low season in the DR to $8,250 per person for a suite during peak season in Cuba.
  • Fathom is also offering a Single Traveler Share program, which will match solo cruisers with potential roommates so they can share double-occupancy rooms without having to pay singles supplements.

ARTICLE HERE

INDUSTRY NEWS    

Macau Smoking Bill - Secretary of Social Affairs and Culture Alexis Tam Chon Weng has said casino employees must give their consent if the government is to allow any exception to the forthcoming ban on smoking in casinos, Business Daily reports.  

  • “The industry and the operators said it is possible to create a very good smoking lounge. We don’t know. It will be depend upon the conditions. If they really have good proposals, if the workers agree with it, it will be fine,” the newspaper quotes Mr Tam as saying in an interview.  
  • But he said no casino operator had yet proposed to him that it be allowed to have smoking rooms in its premises.

ARTICLE HERE

 

Macau Tourism Strategy - Secretary of Social Affairs and Culture Alexis Tam Chon Weng’s tourism strategy is to make the flow of visitors to Macau more even, instead of peaking at certain times of the year, and to get visitors to stay longer.  The newspaper quotes Mr Tam as saying in an interview that he would present to the Legislative Assembly this month his plans for more enticements for tourists.   “For example, we would build more museums or themed buildings to attract more tourists to stay in Macau for longer,” Mr. Tam said.

ARTICLE HERE

Takeaway: We're still not sure what the government can do to increase near term visitation

 

Macau Airport Traffic - Macau International Airport (MIA) recorded 6% YoY in passenger traffic volume during the first three quarters of the year, to 4.30 million from around 4.06 million.  MIA also revealed that Korean companies Jeju Air and T’Way Airlines are considering launching flights to the territory. During this period, visitors from the Mainland China market decreased by 1% although MIA did not disclose the precise number. Passengers from Southeast Asia increased 14%, while travellers from Taiwan increased 4%.

ARTICLE HERE

  

REGIONAL REVENUES (SEPT):

 

Maryland (SS GGR): +6% YoY

Takeaway: Consistent with our thesis of a strong September rebound from August. We still like BYD and PENN on the long side