• Isle of Capri, with a proposal for a $125 million casino in downtown Cape Girardeau. The project was endorsed by the city council, though final approval depends on a citywide referendum in November.

St. Louis Capital Partners was expected to propose a project in Cape G, but decided otherwise.

• Casino Celebration, led by the Koman family, wants to build a $115 million casino in north St. Louis and has the support of the city and a land deal with Great Rivers Greenway. Jim Koman co-owns the Casino Queen in East St. Louis.

• North County Development proposed a $350 million casino in Spanish Lake, which is in north St. Louis County. This proposal has drawn the strongest opposition from local environmentalists and St. Louis County Executive Charlie Dooley.

• Epic Gaming, made up of Las Vegas-based casino executives, wants to put a casino in Sugar Creek, but has yet to make details public.

• Sunway Gaming also proposed a Sugar Creek casino. The Kansas City-based group has been involved in Indian casino projects and applied earlier this year to build a casino in Iowa.

The Missouri Gaming Commission is expected to release more proposal details next week. The license should be awarded by year’s end

HT bought a 228-room Hampton Inn in Washington DC for $320,000 a key. The price implies an 8.3 percent cap rate on the company’s 2011 projected net operating income, he said.

LHO made three separate acquisitions paying $493,000 a key for a 294-room Westin Philadelphia, $274,000 a key for a 288-room Embassy Suites in Philadelphia and $341,000 a key for the Hotel Monaco in San Francisco. The rates compare to LHO’s average of $270,500 a key.

To drive his point home, Greff compared the following implied values and what he thinks values will be at the end of the year:

Company Rooms Implied value Implied value
per room per room at JPMs
YE10 PT

Starwood Hotels & Resort 21,155 $248,997 $330,459
Host Hotels & Resorts 61,428 $222,079 $225,859
Sunstone Hotel Investors 10,966 $184,784 $228,638
LaSalle Hotels Properties 8,736 $270,467 $309,948
Hyatt Hotels Corporation 28,616 $164,160 $222,081
Chesapeake Lodging Trust 1,423 $183,010 $191,979

The burgeoning lodging industry recovery will lead to a correction of what Greff calls the bi-polar bid/ask spread, as investors get proof that recovery has indeed taken hold, he said.

The hot markets—key gateway cities, top 25 markets and high-barrier-to-entry—will maintain their appeal through 2011, he said, thanks to buyers flocking to cities with a fair amount of distressed supply and a strong, diverse mix of transient, corporate and group demand.

Long-term growth however will depend on a sustained recovery of the broader economy.

By the end of the year, demand is expected to increase by almost 7 percent, before slowing down to a moderate pace.

Meanwhile, supply growth will decline from 3 percent in 2009 to 2 percent this year and 0.4 percent in 2011.

This means that the demand that does occur will not be absorbed by new properties

The situation will give occupancy a 2.6 percentage point boost this year to 57.2 percent, which is 5.1 percentage points below the 62.3 percent 20-year average.

So far, ADR rates have relied on higher rated chain-scale segments to push averages up. This trend should come to an end as operators begin taking steps to increase rates.

ADR is forecasted to end the year 0.6 percent lower last year’s average, followed by 4.1 percent growth in 2011.

RevPAR is expected to increase 4.1 percent this year and 6.7 percent next year.

Percent change PWC sees from 2009 to 2010

ADR RevPAR
Luxury + 0.6 + 7.7
Upper upscale – 0.7 + 5.5
Upscale – 1.3 + 5.1
Midscale with F&B – 1.8 + 0.1
Midscale without F&B – 1.2 + 3.8
Economy – 3.3 + 0.5
Independent Hotels – 0.6 + 3.0
US Total – 0.6 + 4.1

Percent change from 2010 to 2011

ADR RevPAR
Luxury + 6.3 + 8.1
Upper upscale + 6.0 + 7.6
Upscale + 5.2 + 7.0
Midscale with F&B + 1.5 + 3.7
Midscale without F&B + 2.1 + 5.5
Economy + 2.2 + 4.9
Independent Hotels + 3.9 + 6.6
US Total + 4.1 + 6.7

The 30-page report is available at www.pwc.com.
Taking in PricewaterhouseCooper’s forecast, Robert LaFleur of Hudson Securities said he remains comfortable with his Buy ratings on Starwoods, Marriott and Wyndham, as the industry—week in and week out—has accelerated its recovery.

The recovery should continue even against the backdrop of a potentially weaker economy, LaFleur said.

Counted on what he called a recognized basis, IGT maintains its lead, but still lost 7 percentage points from last year, Eilers said. WMS’ ship share was 28 percent.

Most of the share gains have been made by WMS and Konami, though the latter settled down after a strong first quarter, which allowed Bally to pick up 4 points in the second.
Overall, the second quarter was disappointing for slot makers with sales down 20 percent from last year to 15,500 machines, though replacement sales rose 8 percent to 12,300 units, Eilers said.

One reason for the weakness is that IGT had an especially strong first quarter, pulling sales into it, Eilers said.

Average sale prices rose 2 percent from last year but dropped 0.5 percent from the first quarter to $14,722. WMS led at $15,559 followed by Bally at $15,328.

Gaming operations revenue declined 1.8 percent from last year on a 2 percent decline in installed machines, with IGT and Multimedia Games losing the most, while Aristocrat, Bally and Konami gained.

However, the installed base rose 1 percent quarter-over-quarter.

IGT remains by far the biggest gaming ops company by revenue and installed base with $230.9 million in the second quarter compared to $78.3 million for second place WMS and $77.4 for third place Bally. Other suppliers are fractions of that.

Below are North American units shipped:

Company Q2 2010 Q1 2010 Q2 2009

IGT 4,500 5,200 7,000
Aristocrat 2,222 1,818 2,345
WMS 4,325 4,392 4,622
Bally 2,065 2,449 4,000
Multimedia Games 128 361 —-
Other 300 325 350

As long as construction financing remains difficult to obtain, the hotel pipeline for Europe the Middle East and Africa will continue to decline into the mid decade, according to Lodging Econometrics.

Openings by the year:

2010: 322 hotels with 56,602 rooms

2011: 296 hotels with 58,301 rooms

2012: 322 hotels with 67,680 rooms

Openings by the region:

• Europe’s pipeline consists of 721 projects with 121,933 rooms. The UK has the region’s biggest pipeline at 207 projects with 29,353 rooms — the fourth largest in the world.

• Middle East projects are at 427 with 116,043 rooms, the lowest level since 2007. While Dubai’s pipeline is declining, it remains the fifth largest in the world at 83 projects and 26,111 rooms

• Africa’s pipeline consists of 141 hotels with 24,271 rooms, 70 percent of which will be completed by 2012.

Station will have $2 billion in debt and a modified ownership structure involving CEO Frank and COO Lorenzo Fertitta, lenders, and a smaller slice for Colony Capital.

Debt had been $6 billion.

Under the agreement, the Fertittas will put $85 million in Station Casinos, which will own several of the current’s company’s largest properties. Fertitta Gaming already had won 11 other Station properties in an auction for $772 million.

Fertitta gaming will operate all the casinos as the largest operator of Las Vegas locals casinos also will remain intact.

Still to be resolved are the properties joint ventured with the Greenspun family, Green Valley Ranch and Aliante Station.

Eighty-six percent of travelers are planning leisure trips this fall, and 42 percent plan on making it their biggest trip of the year.

Fifty-two percent want to take urban getaways, compared with 39 percent who want to go beachside and 32 who plan on getting back to nature.

The top ten most browsed hotspots:

1. New York
2. Las Vegas
3. Orlando
4. Honolulu
5. San Francisco
6. Chicago
7. Myrtle Beach
8. Boston
9. San Diego
10. Los Angeles

Cordish alleges that PENN’s support of the campaign puts it in breach of its own license to build a slots facility in Cecil County, as state licensing law requires casino operators to cooperate with each other.

PENN is reportedly supporting Citizens Against Slots at the Mall organized by the Maryland Jockey Club, which PENN owns a share of and whom Cordish beat out for the slots license in Anne Arundel County.

Slots at Arundel Mills have been stalled for a year due to the campaign to block the machines. Cordish argues the delay is costing $400 million in slot proceeds it would have received if the parlor were open that are instead going to PENN’s Hollywood Casino at Charles Town in West Virginia.

Cosmopolitan in Las Vegas has signed on with Marriott.

The $3.9 billion, 3,000-room hotel casino will be part of MAR’s Autograph collection, a line of upscale independent hotels the company launched last year.

It will be the largest hotel in the collection and the only one with a casino, ABC News reported.

The Cosmo is scheduled to open in December with 2,000 of its 3,000 rooms.

Saipan’s House of Representative passed a bill legalizing casinos, two years after voters rejected a similar measure, the Saipan Tribune reported.

The bill also increases the gaming tax on the islands of Rota and Tinian from 2.5 to 25 percent. A Saipan casino would pay 50 percent.

Tinian already allows casinos, has one open and several proposed. Rota has one prospective casino since it legalized them.

House Speaker Froilan Tenorio introduced the bill, saying casino operations are the only option left to keep the economy from further recession.