(CORRECTED) LEISURE LETTER (4/14/2016) - WYNN, RCL, CCL, NCLH, MSC CRUISES

COMPANY NEWS               

WYNN -  72,851 shares were transferred at an average price of $98.78 btw WYNN's family trust through Form 4

  • The footnotes state that the transactions reflect "a substitution of cash for shares held by a trust previously established by Wynn" and the noted share values reflect the price "used for valuing the transferred shares for purposes of the asset substitution provisions". 

 

RCL - For the first time ever, Royal Caribbean will position two ships in its Cape Liberty, Bayonne cruise port. Both Anthem of the Seas and Rhapsody of the Seas will sail Caribbean itineraries during the summer of 2017.  Rhapsody of the Seas will sail seven-night Bahamas cruises and a five-night Canada and New England cruise in the summer. It also will sail a 12-night fall foliage cruise and 13-night Southern Caribbean cruise before repositioning to Tampa for the winter. Anthem of the Seas will continue to call at Bermuda, the Bahamas and Caribbean throughout the summer, in addition to sailing a offering of Canada and New England cruises.  

 Takeaway: Could see slightly higher exposure to the Caribbean in 2017.

 

RCL (TUI CRUISES) - Thomson Cruises has announced that its new addition will be named TUI Discovery as part of the re-brand which will see the whole of Thomson transition to TUI over the next eighteen months. The update on TUI Discovery comes as Thomson Cruises also announces its new program for summer 2017 which will see the fleet based in the western Mediterranean, eastern Mediterranean and the UK for the first time since 2014.  TUI Discovery and Thomson Majesty will both be based in Palma, Majorca whilst Thomson Dream will sail from Corfu.  Thomson Spirit will move to Dubrovnik, Croatia and offer adult-only cruising while the fifth ship in the fleet, Thomson Celebration, will split its summer between Malaga, Spain in May and October and ex UK sailings from Newcastle between June and September.  

 

CCL - Announced that it has declared a dividend of $0.35 per share, an increase of 17%.  "The increase in our quarterly dividend follows a 20% increase less than a year ago and reflects our sustained earnings improvement and growing net cash flow which is forecasted to reach $4.5 billion in 2016," said Arnold Donald, Carnival Corporation & plc President and Chief Executive Officer.  "The increased dividend, in combination with our current share re-purchase program, underscores our commitment to return value to our shareholders." The company's board of directors approved a record date for the quarterly dividend of May 27, 2016, and a payment date of June 17, 2016.

 Takeaway: CCL has enough cash for a div increase

 

NCLH - The luxury line Wednesday said it would become the first cruise operator to include business class flights to its ships in the fare for all customers.   The offer applies to all European, Asian and South American voyages where a customer would need to travel on an intercontinental flight in order to reach the ship or to return home.  Regent said the included business class flights would be available to and from 26 U.S. and Canadian gateway cities.  Even passengers in the lowest categories of cabins will be eligible for the included flights.  Regent bills itself as the most inclusive cruise line. It already includes shore excursions, fine wine and spirits, unlimited Internet access, prepaid gratuities, ground transfers and pre-cruise hotel stays in its fare.

Takeaway: One way Regent says competitive is to offer more freebies 

 

MSC CRUISES - MSC Cruises, as reported previously, will implement several new sales policies that make its terms less generous and more closely aligned with those offered by its competitors in North America.  Among the changes are its first policy restricting the practice of commission rebating, a rule in place for more than a decade at brands such as Royal Caribbean International and Carnival Cruise Line.  “We want travel agents to advertise us at the going rate,” said Ken Muskat, the executive vice president of sales, public relations and guest services at MSC Cruises USA. “We want it to be fair across the board.”  The other policy changes include raising deposit minimums, making it harder to cancel cruises without a penalty, and setting a two-month window for passengers to move a direct booking to their agent’s account.  

INDUSTRY NEWS  

MACAU | NEW JUNKET CAPITAL REQUIREMENTS - Macau’s government is working with gaming promoters on a proposal that would see capital requirements for new operators increasing 100-fold, according to people familiar with the matter. If passed, the move could further squeeze revenue for Wynn Macau Ltd. and other casino companies.  One proposal under consideration includes raising capital requirements for new junket operators to 10 million patacas ($1.3 million) from 100,000 patacas, and the inclusion of at least one Macau resident as a shareholder, said one of the people, who asked not to be identified because the deliberations are private.   

Takeaway: Given the tough environment, the question is who is interested today in becoming a new junket operator? 

 

MACAU | TOURIST PRICE INDEX - DSEC indicated that the Tourist Price Index for the first quarter of 2016 decreased further by 6.67% YoY to 136.44, attributable to lower charges for hotel accommodation, and reduced prices of handbags and women’s clothing. Price index of Accommodation decreased most significantly by 23.80% YoY, followed by Entertainment & Cultural Activities (-2.35%) and Clothing & Footwear (-1.98%). On the contrary, price index of Food, Alcoholic Drinks & Tobacco increased by 3.77% and that of Transport & Communications rose by 2.31%. 

 

MACAU | MASTER CARD ASIAPAC DESTINATION INDEX - The first MasterCard Asia Pacific Destinations Index tracking the growth of the region’s tourism doesn’t include Macau in its top 20 for overnight tourist arrivals and tourists’ expenditures.  The study is the first MasterCard Asia Pacific Destinations Index - an offshoot of the annual Global Destination Cities Index - to take a more in-depth focused look at these tourism trends, taking data from the national tourism boards of 22 countries and ranking 167 destinations, including island resorts as well as towns and cities across the region, in terms of the total number of international overnight arrivals; cross-border spending; and the total number of nights spent in each destination.  According to MasterCard Asia Pacific Destinations Index, Hong Kong ranked 7th with 8.3 million international overnight visitors, Shangai ranked 12th with 5.5 million overnight visitors, Beijing was 18th with 4 million, and Guangdong Province (excluding Guangzhou, Shenzhen & Zhuhai) ranked 19th with 3.9 million visitors.  Macau's dependence on Chinese visitation is the main reason they didn't break the top 20 on the index.   

 

SINGAPORE | INTEREST RATE CUT - Singapore's central bank unexpectedly eased policy on Thursday after growth stalled in the first quarter and as slackening global demand darkened the outlook for the trade-dependent economy, sending the local dollar tumbling to its worst loss in eight months.  In its third policy easing in 15 months, the Monetary Authority of Singapore (MAS) said it will set the rate of appreciation of the Singapore dollar NEER policy band at zero percent - starting on Thursday - and shift to a neutral policy stance.  It marked the first time the MAS has moved to 'neutral' since the global financial crisis, and compares with its previous policy stance of a "modest and gradual" appreciation of the Singapore dollar.

Takeaway: Despite the easing of policy, the USD/SGD has moved lower YTD by 4%. 

 

GAMING | BATON ROUGE SMOKING BAN -  The Baton Rouge Metro Council narrowly rejects smoking ban for bars, casinos; long debate touches on health, morality, business climate.  Casino executives from L’Auberge Casino and Hotel, Hollywood Casino and the Belle of Baton Rouge showed up in full force and tried to quell concerns about their employees’ well-being.  Mickey Parenton, the senior vice president of operations and general manager of L’Auberge, insisted his No. 1 priority is his employees. He said if an employee complains about smoke, he would move the employee to a smoke-free part of L’Auberge without a change in pay.  Casino executives said they would expect about a 20% drop in revenue if the ordinance passed. New Orleans banned smoking in casinos and bars a year ago, and council members and people attending Wednesday’s meeting squabbled over how much that smoking ban is to blame for declining revenues at Harrah’s New Orleans Hotel and Casino. 


 

NEVADA | UNEMPLOYMENT/EMPLOYMENT DATA - The state’s jobless rate came in at 5.8%, down from 5.9% in February and 6.9% in March 2015, the state Employment, Training and Rehabilitation Department reported Wednesday.  Much of the improvement came from job growth. Employers expanded payrolls by 2.8% YoY, for the nation’s third-best job-formation rate.  Nevada’s employers added 35,500 jobs year to year, for the 63rd straight month of gains. March was also the 44th consecutive month in which the state’s annual job growth outpaced the nation’s, said Bill Anderson, the employment department’s chief economist.


 

LODGING | AFRICAN HOTEL DEVELOPMENT - Despite slowed growth across the continent, Africa remains a major hospitality destination for tourists and business so investors are planning 30% more hotels this year than they did in 2015, says a new report.  The spike in hotel development on the continent is mostly driven by sub-Saharan Africa where growth more than doubles the rate in North Africa, according to W Hospitality Group which tracks the growth rate of expansion for regional and international hotel chains in Africa. The slowing hotel development growth rates in Northern Africa, asides from the sociopolitical crises in Egypt and Libya, is due to the market being “more mature” says Trevor Ward, managing director of W Hospitality Group.  In contrast, sub-Saharan Africa remains still holds gaps of opportunities which investors are clearly keen to explore. Nigeria tops the list of countries with the most planned hotels while Angola, buoyed by AccorHotels’ deal to build 50 hotels in the country, has risen to second place. While the report covers the hotel deals agreed for the year, the timeline for the construction and opening of these hotels is entirely different. Access to finance, among other reasons, have slowed down the execution of building plans. But the new deals signal long-term trust in the African hospitality industry despite the current economic outlook for leading economies on the continent.


 

 

REGIONAL REVENUES (MAR) 

 

Iowa SS GGR: +1.0% YoY 

  • BYD: +5.1% YoY
  • CZR: -1.0% YoY
  • ISLE: +3.0% YoY
  • PNK: +0.5% YoY

Atlantic City SS GGR: -1.7% YoY

  • BYD (Borgata): -4.0% YoY
  • CZR: -4.7% YoY