They say the best things in life are free. This may be true, but many of the good things in life including holidays and family entertainment have to be paid for. With super-low interest rates fostering consumer confidence and a predicted long-term growth in global tourism, these two companies look positioned to take advantage.
Crown Resorts (ASX: CWN) probably needs little introduction to most Australians and an equity interest in the business may be a more sensible investment than one at its glitzy casinos. James Packer is the charismatic and highly-ambitious boss and he's just struck an agreement with the New South Wales government to develop Sydney's Barangaroo South area. This is a piece of prime real estate between the harbour and business district. The development is to include a six-star hotel as part of a luxury entertainment complex including apartments, restaurants, bars and VIP gaming areas. Syd Vegas it may not be, but it may still be a roaring success.
The bill for the total urban transformation of the area is expected to reach $6 billion. This is good news for construction company Lend Lease (ASX: LLC), which is contracted to complete much of the work. Crown has also been expanding into the gamblers' paradise of Macau. Disposable incomes across Asia are rapidly rising and the long-term growth fundamentals across the region seem to be in place if properly managed.
Ardent Leisure (ASX: AAD) operates Australian theme parks, marinas, bowling centres and North American entertainment complexes. Among its Australian assets are the Goodlife health clubs, Dreamworld theme park and Kingpin bowling centres. In FY13 the group more than doubled its full-year net profit to $35.6 million. Health club businesses are notoriously competitive but this area has been the group's standout performer recently, with approximately one-third of FY13 earnings coming from this division. In the first quarter of 2014 the group has reported health club revenues and earnings up more than 50% on the prior corresponding period. The Goodlife brand appears increasingly strong in major cities like Sydney and Adelaide. Its now the second largest gym operator in Australia and intends to continue expanding through acquisitions, it will be relying upon a take-up in gym memberships but that seems a reasonable prospect in an increasingly health conscious culture.
Theme park earnings were flat in the last financial year, but that may be set to change for the better as a falling Australian dollar attracts more foreign tourists to its Gold Coast theme parks. Moreover, it should encourage Australians to holiday at home in 2014.
Foolish takeaway
Both these businesses have seen share price surges recently, as the market recognises an improving outlook. Of the two, Crown is probably the safer bet, although I think both are worthy of investor consideration.
