Takeaway: Very bullish October commentary somewhat incongruent with slightly lower guidance


  • Hospitality Results (excludes AC Hotel at National Harbor, D.C.)
    • SS Revenue +1.5% YoY, Total +3.2% YoY
    • SS Adj EBITDA +7.8% YoY, Total +8.9% YoY
    • SS Adj EBITDA margin +1.8% (29.8% vs 28.0% in 2014)
    • Total Adj EBITDA margin +1.5% (28.2% vs. 26.7% in 2014)
    • OCC -2.1% YoY, ADR +1.1% YoY, RevPAR -1.8% YoY, Total RevPAR +1.5% (room rennovations at Gaylord Opryland and Gaylord Texan)
  • Gross Room nights booked +24.1% YoY, leads for group bookings are +10% YoY
  • Group Attrition -4.0% YoY, worse than they anticipated but they don't see systemic issues with the group segment as a result  
  • Cancellations actually second lowest in last 8 years. Q3 is seasonally the worst time for cancellations
  • Opryland - flat revenues, OCC -6.1% YoY, partially offset by strong banquet revenue 
  • Palms - Revenues -16.7% YoY, OCC slowed due to calendar shift
  • Texan - Revenues +12.1% YoY,  OCC +2.2%, ADR +6.8% YoY (could be adding more group space to this property) 
  • National - Revenues +7.0% YoY, strong banquet performance drove results 
  • FY 2015 Guidance - RevPAR guidance top end lowered due to a larger leisure component in November and December. Comps are very hard in November and December (RevPAR in mid to high teens for both months).
  • RHP 3Q CONFERENCE CALL NOTES  - rhp guidance
  • 2016 view of strong future has not changed. 100k more room nights currently booked vs. the same period a year earlier. (10% more YoY)
  • Exploring opportunity to expand more group space and also look into options to expand the transient side of their business. 
  • Transient rate increase have been positives and they are postioned well for the transient segment in 4Q
  • Albeit slower, economy still growing, they maintain their positive views based on their group demand. 
  • October has been the best october ever, generating $100M, October RevPAR +16% across the portfolio and 13% in total RevPAR
  • 85+% in consolidated OCC for October 
  • Cite markets concern with REIT's ability stay attractive amid possible rate rises. They are not concerned with their ability to boost their dividend, and very bullish on the properties they own.  


  • 100% of additional room nights booked are all corporate groups. Have good connection with their hotel managers (Marriott). 
  • Marriott aids their transient and group segment. 
  • Not seeing an influx of lower rated groups, most of their focus on higher rated groups
  • Nashville market transformation is incredible, leisure and group demand continues to be very strong. Would consider adding more rooms in the future, but most likley as a standalone property instead of adding on to Opryland.  
  • Attrition spike not concern: reasons were group specific issues, smaller groups that were likely first term groups who underestimated costs etc., and finally there was a large group that had to shorten their stay due calendar shift. 
  • They conducted deep dive analysis on the group attrition and found no parallels to 2008 trends
  • Very little energy related group exposure, less than 5% of group is energy related. Continue to very bullish on the Dallas property due to visibility into 2016
  • Groups set new records for spend levels, outside the room spending levels at record levels, but still a lot of room to run for other clients 
  • Pharma, Tech, Financials make up the bulk of their business  
  • Not seeing fewer rooms booked relatively to meeting space booked. Meeting Planners continue to ask for more meeting space.  



Got Myopic Loss Aversion (MLA)? Why Your Smartphone May Be Killing Your Portfolio


Got Myopic Loss Aversion (MLA)? Why Your Smartphone May Be Killing Your Portfolio - km fbn


Hedgeye CEO Keith McCullough, JPMorgan strategist Anastasia Amoroso and FBN’s Jo Ling Kent and Dagen McDowell discuss whether stock market smartphone apps are negatively impacting your portfolio’s returns on Mornings with Maria.

RTA Live: November 3, 2015



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Retail Callouts (11/3): TIF E-comm Traffic, Retail Sales Trends, LB

Takeaway: TIF traffic trends decelerate in 3Q. Rare spike in both ICSC/Redbook, compares easy until Black Friday / Dec, which is what really matters.

TIF - E-comm Traffic Trends Decelerate in 3Q

TIF just closed the books on 3Q, and the traffic trends headed out of the quarter look particularly weak. E-commerce accounts for just 6% of total sales for the company -- but because the average ticket for TIF sits at $750 there is a lot less impulse and a lot more planning before a consumer slaps down a credit card and walks away with a blue box. The metric, which looks at the relative strength of an e-commerce site relative to the internet in aggregate takes into account two metrics (unique visitation and page visits per user), decelerated from +10% YY at the end of the 2nd quarter to -5% at the end of 3Q with marked softness throughout the quarter.

Not a good barometer for brand strength in 3Q, especially when the common perception seems to be that “just because Tiffany (TIF) blew up earlier this year, it can’t blow up again.” We disagree. It actually blew up twice this year. And we think there will be another. Next year's estimates are sitting at $4.54. We think an optimistic number is $4.25. If our Macro team's bearish call plays out according to plan, TIF will be lucky to earn $4.00.

With productivity, margins and returns all near 10-year highs, and the stock trading at 19x a number we don't think is doable, we still like this one on the short side.

Retail Callouts (11/3): TIF E-comm Traffic, Retail Sales Trends, LB - 11 3 2015 chart1


RETAIL sales Trends (ICSC / RedBook) - a rare spike in both indices, which happened on the same day LB put up a big comp (3Q at ~7% vs 5% expectations). On the heels of a lot of negative sentiment around retail, this offers up a 1-day reprieve. Note, however, that comps are very easy through most of November -- until Black Friday and December, which is what really matters.

Retail Callouts (11/3): TIF E-comm Traffic, Retail Sales Trends, LB - 11 3 2015 chart2

Retail Callouts (11/3): TIF E-comm Traffic, Retail Sales Trends, LB - 11 3 2015 chart3

Retail Callouts (11/3): TIF E-comm Traffic, Retail Sales Trends, LB - 11 3 2015 chart4


LB - L Brands Reports Oct. Comp #s, Takes Up 3Q Ahead Of Investor Day



DLTR - Dollar Tree completes sale of 330 Family Dollar stores to Sycamore Partners. Stores to be branded Dollar Express.



AMZN - Amazon bookstore opening in University Village.  The 5500 SqFt store will carry 5000-6000 titles.



AEO - American Eagle Outfitters acquiring Tailgate Clothing Company for $11mm, takes up 3Q guidance.



GNC - GNC expects to repurchase an additional $200mm shares by year end, raising guidance 2 cents to include the impact.



EBAY - eBay Enterprise Sold Off and Broken Up



99 Cents Only announced Felicia Thornton has been appointed as its CFO and treasurer



SHLD - Sears enters online home services market



BONT - Bon-Ton Stores Announces Extension of Private Label Credit Card Agreement With Alliance Data's Card Services Business



GCO - Genesco To Acquire Little Burgundy Chain From The Aldo Group



Sports Authority Launches New Fitness Training App



Selfridges Buys Arnotts Department Store in Dublin


CoreLogic HPI | Serial Overestimation

Takeaway: While the CoreLogic data continues to tell a story of accelerating HPI, another emergent trend is that of serial revisions & overestimation.

Our Hedgeye Housing Compendium table (below) aspires to present the state of the housing market in a visually-friendly format that takes about 30 seconds to consume. 


CoreLogic HPI | Serial Overestimation - Compendium 110315


Today's Focus: September CoreLogic Home Price Report


CoreLogic HPI:  Over the last year,  the CoreLogic HPI series – which has historically been the best, most real-time price series – has shown an alarming trend toward imprecision and overestimation.   


The 1st chart below shows the revisions to the Jul/Aug data.  Alongside the September release, August was revised lower by -150bps from +6.9% YoY to +5.4%. July, meanwhile, was revised lower for a second time with a revision of -70bps taking price growth down to +5.0% YoY.  Price growth in July was originally estimated at +6.9% YoY, so the collective revision of the last two months has brought that down by almost a full -200bps. 


And this revision pattern is not isolated to the September release – the serial overestimation in the original estimate followed subsequently by large-scale negative revisions has characterized the pattern every month YTD.   


The  revision is not inconsequential as it effectively (almost) changes the read-through.  Whereas the original estimate has reflected conspicuous acceleration and a positive read-through for housing related equities, the revision to flat-to-modest HPI carries a less bullish read-through for the complex.  In fact, the collective revision to July shows HPI decelerating modestly in the month and completely reverses the HPI-Equity Performance conclusion.


Further, historically, CoreLogic has been a very good lead indicator for the Case-Shiller HPI series, front-running the slope of HPI in Case-Shiller by 2-3 months. That lead indicator status has become increasingly suspect given the prevailing revision pattern. 


Inclusive of the apparent methodological flaw in the CoreLogic series, the three primary price series (CoreLogic, FHFA, Case-Shiller) continue to tell a largely congruous story of flat-to-modestly accelerating HPI.  We’re going to call CoreLogic to see if we can get some tangible underpinning for the serial overestimation in the data.  We’ll report back with anything of consequence.  



CoreLogic HPI | Serial Overestimation - HPI Revision


CoreLogic HPI | Serial Overestimation - HPI YoY   Ex Distressed TTM


CoreLogic HPI | Serial Overestimation - HPI YoY   TTM




About CoreLogic:

CoreLogic HPI incorporates more than 30 years worth of repeat sales transactions, representing more than 55 million observations sourced from CoreLogic's property information database. The CoreLogic HPI provides a multi-tier market evaluation based on price, time between sales, property type, loan type (conforming vs. nonconforming), and distressed sales. The CoreLogic HPI is a repeat-sales index that tracks increases and decreases in sales prices for the same homes over time, which provides a more accurate constant-quality view of pricing trends than basing analysis on all home sales. The CoreLogic HPI covers 6,208 ZIP codes (58 percent of total U.S. population), 572 Core Based Statistical Areas (85 percent of total U.S. population) and 1,027 counties (82 percent of total U.S. population) located in all 50 states and the District of Columbia."


Joshua Steiner, CFA


Christian B. Drake




November 3: 10:00AM: NCLH 3Q CC 

November 3: 10:00AM: RHP 3Q CC  

November 3: 11:00AM: H 3Q CC - , PW: 52469697

Novmber 4: 4:30PM: AWAY 3Q CC - ,PW: N/A

November 4-6: Anthem of the Seas Dead Cruise/Investor Event

November 5: 8:30AM: MPEL 3Q CC - , PW: MPEL


Transit Visa Policy - The Macau Police used their WeChat page to counter the rumors regarding possible changes to the transit visa policies. Remember, Union Gaming reported over the weekend that the government was implementing transit visa changes, citing multip sources. Below is a translated snag from WeChat. 

LEISURE LETTER (11/03/2015) - CZR, BLOOM, AIRBNB, CCL, UBER - Macau Police

Takeaway: Interesting turn of events. The July transit changes generated more visitation through that visa scheme but did not translate into gaming revenue growth. Even if Union Gaming was correct, it's difficult to say there would be any revenue impact this time.


CZR - Caesars Entertainment Corp. is pulling out of both Cleveland and Cincinnati, where it owned and operated two Horseshoe casinos that are being taken over by Rock Gaming LLC.  The Cincinnati Business Courier, a Baltimore Business Journal sister publication, reported the Horseshoe Casino Cleveland, Horseshoe Cincinnati and ThistleDown Racino in North Randall, Ohio, will be rebranded and operated by Rock Gaming. Rock Gaming already owned the Cincinnati property, and the casinos and racino will remain open during the rebranding process.



BLOOM - Philippines-based casino operator Bloomberry Resorts Corp reported a net loss of PHP189.5 million ($4.1 million) for the third quarter of 2015, compared to a net profit of PHP991.7 million a year earlier. The firm on Tuesday said its Philippine operations recorded PHP281 million in net profit for the three months to September 30, while a casino resort in South Korea that it recently took over generated PHP471 million in net losses.



AIRBNB - American Express is teaming up Airbnb to let its card members pay for their home and apartment rentals more easily. Airbnb will now accept American Express membership rewards points to pay for booking. Users will be given the option to sign into the site using their AmEx credentials and then given the ability at checkout to pay fully or partially for their home rentals using their points. 


Takeaway: A valuable partnership for both sides. 


CRYSTAL CRUISES - In response to cruiser and travel agent demand, Crystal River Cruises -- the new river cruise division of luxury line Crystal Cruises -- has placed orders for four new river ships, which will launch in 2017.  In addition, the line has purchased an existing riverboat, which will be refurbished, renamed and kick off river cruises for the line in July 2016, a year earlier than planned.


CCL - As part of a $300-million refurbishment project, Holland America Line is planning upgrades to its top staterooms with new furnishings, colors, amenities and upgrades for all suites on the line’s Signature-, Vista- and R-Class ships. The first ships to undergo the suite transformation will be ms Eurodam and ms Oosterdam, followed by ms Nieuw Amsterdam, ms Westerdam, ms Zuiderdam and ms Noordam.   



UBER - Uber expects its turnover in China to exceed that of the US by the end of the year. Meanwhile, Guangzhou has recently overtaken Chengdu to become Uber’s top city in the world in terms of booking volume.  Uber entered the Chinese market in 2014. It has been operating in the major cities of Beijing, Shanghai, Guangzhou and Shenzhen for over a year. Its service now covers 21 cities, and it will continue to expand to other cities in the next 12 months.



Philippine Gaming Investment - Philippine property firm Megaworld Corp and casino operator Travellers International Hotel Group Inc are spending an aggregate of PHP65 billion ($1.4 billion) to develop a 31-hectare (76.6-acre) “leisure and entertainment township” at Entertainment City in Manila Bay.  The companies will be allocating a total of about US$300 million to build the residential portion of the project, Megaworld said on Monday. It will be next door to a new casino project called Resorts World Bayshore, to which Travellers International is already committed.




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