Macau Update (MGM, LVS Sands, Melco Gaming)

Great video update to the problems in China/Macau.



Dan Ross
http://www.betterbizbooks.com/

Updated Las Vegas info.

Not sure if everyone is aware of this:

Boyd Gaming Corp. recently postponed work on its $4.8 billion Echelon resort in Las Vegas. The Las Vegas-based company, whose ratings were lowered by Moody's last week, also suspended its annual cash common dividend. They have a steel framed building up and that is all that will be completed for the next 6 to 12 months. Bet Vegas gov’t officials were happy to see that! NOT!

MGM Mirage announced wednesday they weren’t going to give out bonuses & their ratings were cut. Meantime, Kirk Kerkorian sold his Ford stake to protect his majority stake in MGM. Rumor has it that he needs to raise more $$$ to finish the CityCenter project so he’ll put $$$ to work with foreign investors.

Then, wednesday as well, LVS sands says that they need to raise a BOATLOAD of $$$$ ($2 billion) to finish their Macau (Cotai strip) property. Adelson, the CEO, thinks banks over there will be more receptive than U.S. banks. The Cotai Strip project in Macau, due to be completed in 2011, is to include retail malls plus hotels that will be operated by some of the biggest names in hospitality, such as Sheraton, St. Regis, Hilton, Conrad, Shangri-La and Traders.

http://biz.yahoo.com/ap/081022/las_vegas_sands_adelson.html?.v=1

Dan

Vegas needs a new airport terminal ???

I've been hounding for awhile that Vegas traffic was really going to get hit during this economic downturn. Rooms are more expensive than ever, restaurants aren't cheap and it seems like it takes a miracle to find a blackjack table under $10 on the strip at times.

Anyway, from http://www.thestreet.com/

http://www.thestreet.com/story/10436739/1/airlines-hotels-clash-over-vegas-airport.html?puc=_htmlbooyah

"Las Vegas, a city built for visitors, is ground zero in the airline industry's effort to cut back on marginally profitable flights. But the city's powerful hoteliers are none too happy about the cutbacks. They still want the carriers to finance a new airport terminal, which is needed to support 32,000 additional hotel rooms slated to open by 2012. The timing is unfortunate. Traffic at McCarran International Airport fell 8.6% in July, compared with the same month a year earlier. In fact, traffic has fallen every month this year, except for February, which had the benefit of leap day in 2008. And the airlines aren't finished cutting. "

Oddly enough, I was talking last night with my mother re: her pending trip and she had indicated that Southwest Airlines was cutting one flight (out of two daily) that fly direct to Vegas from where she lives....

Dan Ross
http://www.BetterBizIdeas.com

40/40 Club at Palazzo fails....tough times for economy & Jay-Z!

• September 8, 2008 Palazzo Wastes No Time Conversion of the 40/40 Club into a Palazzo race-and-sports book took place in what could be record time. The club, which closed last Monday, reopened on Thursday as Sportbook Bar & Grill, just in time for the kickoff of NFL season. The former nightclub has been augmented with five betting windows.

Dan Ross
http://www.BetterBizIdeas.com/

Vegas going into the Toilet - Another disturbing datapoint

I just got back from Vegas earlier this week and I thought business was off a bit. The tables didn't seem as full, restaurants, pool areas, etc.

Then I find the below info. earlier today:

http://www.lasvegasadvisor.com/whatsnews.cfm#3471

* September 11, 2008 Vegas Visitation Down in July Not since the start of the Iraq War, over five years ago, have visitation levels to Vegas fallen as low as they did in July, according to numbers released yesterday by the Las Vegas Convention & Visitors Authority. Room rates were off 10% from July '07, while visitation was down 5%, as hotel occupancy, hovering around 88%. More conventions were held, but conventioneers curtailed their stays.

* September 10, 2008 NV Down -13% in July Comparison to a very robust July 2007 gives this year's July casino-revenue numbers a difficult act to follow, resulting in declines that are way above average for the year to date. Measured against last year, the state was -13% overall, with Strip slot revenues, table win and baccarat win -8%, 21% and -26%, respectively. Most Clark County jurisdictions experienced very adverse comparisons, with the Boulder Strip and North Las Vegas having the worst of it. By contrast, Reno was only off 1% and the unpredictable South Tahoe area noted an 11% increase. July's numbers mark seven straight months of decline for Nevada casinos. As far as trends go, table and baccarat drop swing back and forth, but slot handle on the Strip is further and further off last year's pace.

Dan Ross
http://www.BetterBizIdeas.com

Things changing in Macau?? WHOA!

Gaming stocks got pounded today, based on the article below, on news that mainland Chinese will only be able to visit the place twice a year vs. currently allowed to visit the island about 6 times or so per year.

http://biz.yahoo.com/rb/080819/casino_stocks.html?.v=1

This clearly has put a ceiling on the expectations surrounding gaming stocks. MGM Mirage (MGM), Las Vegas Sands (Venetian Owners: LVS) & Wynn Resorts (WYNN) got hammered today. Oh, and that really puts a dent on me going into Melco (MPEL), which I mentioned a few days ago. I think I'll be holding off on investing until all the analysts take their EPS estimates down and downward pressure in the shares slow down.

Dan Ross
http://www.betterbizbooks.com/

Gaming in Asia - Long-term Trends/Analysis on CNBC

http://www.cnbc.com/id/15840232?video=758325268

At the end of the day I DISASGREE with this guy. I find it ironic that the AGA (American) is commenting on Macau. Doesn't he have a vested interest? LOL

Asians like table games and probably will move towards MORE but I think they will remain heavily table based. I personally find more women play slots/machine games vs. table games so, as that segment of the economy starts to earn more there might be greater long-term potential.

I think most Americans are TIRED of ZERO freebies in Vegas and that is one reason why Vegas will be hurt MORE this time vs. previous slowdowns. Why?

1) The middle class can't afford the "fine dining." I fine that most people I talk to just want better "normal, affordable food/selections." When I was in Vegas earlier this year I would NOT have met this demographic as I wanted my girlfriend to enjoy the experience. We ate at many nice restaurants and took in shows every night but the bill was STEEP! She noticed it and, when we went to Tahoe a month later to ski everything was a bit lower key.
2) Airfares are through the roof so, even if you give someone a free room they have to get there!
3) When people get there they can't afford as much due to higher debt levels than previous recessions/slowdowns.
4) At some pointt the American casinos will eventually figure out that people want more VALUE (bang for the buck). The way to maximize profits is to FILL IN ROOMS, which generate gambling revenues and food sales. We'll see how it plays out......

Finally, the way to play Macau gaming is Wynn Resorts (Ticker: WYNN), MGM (MGM) and Sands(LVS). I've been told that, of the three, the Sands (Venetian) is BAR NONE the most comparable to Vegas.

Dan Ross
http://www.BetterBizBooks.com