"America is creating a vast `Experience Economy'," says Bear Stearns senior managing director Jason N. Ader. "Baby boomers, their "Gen-X" kids and the "echo boomers" not far behind are flush with cash -- and feel entitled to frequent leisure activities that offer not
just relaxation, but also escape, entertainment and sensory stimulation," he observes. "Boomers' priority on leisure in particular is driven by their feeling that they are overly stressed, time-constrained and deserving of relief - and rewards."

Mr. Ader with Bear Stearns analysts Joseph Buckley, Marina K. Jacobson, Raymond L. Katz, Robert LaFleur and Christine J. Lumpkins authored the 1999 Bear Stearns Leisure Almanac.

The Demographics

Over the next ten years, America's over-55 age group is expected to grow by nearly 25 percent to 70.9 million people, Bear Stearns says. Armed with substantial financial resources, these aging Baby Boomers are more prone than their parents to spend generously for
high-end leisure activities, according to the firm. And by example, Boomers teach their kids that leisure is not an option, but rather an ingrained aspect of lifestyle -- the counterweight to careers and working.

"Of all groups, Baby Boomers spend the most on leisure and entertainment - nearly 50 percent more than younger adults and 45 percent more than older people," notes Bear Stearns analyst Christine J. Lumpkins. "That's a windfall for leisure firms," she adds.

Industries Poised to Benefit

Cruise lines, motor and snow sports, timeshare and lodging top the list of most promising leisure industries, according to the 1999 Bear Stearns Leisure Almanac.

Cruise Lines

Since 1970, 67 million passengers have taken a deepwater cruise. Thirty-five percent of those trips were in the last five years. Since 1980, the number of cruise passengers has risen at a compound annual rate of 7.9 percent, closely tracking capacity growth, according to the Almanac.

Amid this steady growth, the cruise industry has acted aggressively to reach out to markets beyond the traditional senior or retiree passenger. That drive includes new destinations, slicker advertising, cutting cruise lengths and revamping shipboard activities.

In a recent survey, 56 percent of U.S. adults said they would like to take a cruise vacation, with Baby Boomers showing the strongest interest, Bear Stearns says. Yet only 11 percent of these adults had taken a cruise in the past, indicating that the cruise industry's efforts to recast itself as an option for younger people is on track, the Almanac reports.

Bear Stearns expects that through 2002, the North American cruise industry will grow capacity and passenger counts at an average annual rate of 7 percent to 8 percent, with a 10 percent to 11 percent increase in 1999.

Bear Stearns maintains a "Buy" rating on Carnival Corp. (NYSE: CCL).

Snow Sports

Although skier visits have remained relatively flat over the past 10 years, ski industry revenues have risen approximately 10 percent as ski operators have developed retail, lodging, food-and-beverage and related businesses on their valuable ski site real estate, Bear
Stearns says.

"Over the last decade, consolidation trimmed the number of ski operators by 30 percent," Mr. Lumpkins notes. "In many of those deals, real estate was a minor factor in the transaction value. But today, ski operators are tapping into the value of their real estate by creating ancillary businesses on-site." Those businesses help draw experience-hungry Boomers, whose children learn the skiing habit from their parents.

Further, snowboarding with its youthful demographic plus new technologies such as parabolic skis and shaped skis are helping freshen interest in snowsports, the Almanac says.

Bear Stearns maintains a "Buy" rating on Intrawest Corp. (NYSE: IDR) and Vail Resorts, Inc. (NYSE: MTN).

Motorsports

Motorsports is one of the fastest growing spectator activities in the country, with live attendance growing at a 5.3 percent compound annual rate over a decade, Bear Stearns says. Meanwhile, track operators are boosting revenues by adding more spectator seats,
raising admission prices and enhancing concession offerings, the Almanac says. Construction of new tracks and raceways is planned to accommodate an increasing number of races.

Beyond live attendance, growth in motorsports' television coverage and viewership are positive trends. Indeed, a number of motorsports TV coverage deals are up for renewal, and dramatically higher viewership points to more generous terms for the sport when contracts are renegotiated, according to Bear Stearns. This could prove a substantial and reliable source of revenue for the motorsports industry, according to the Almanac.

Motorsports is also seeing interest from non-traditional sponsors as corporations vie to tap into the sport's 38 percent female demographic. New categories of sponsors are likely to come forward as alcoholic beverage and tobacco firms take a smaller role, Bear Stearns reports.

The firm does not currently maintain coverage of any motorsports companies.

Timeshare

The timeshare industry has enjoyed dramatic growth during the last 15 to 20 years, and Bear Stearns expects that trend to continue, according to the Almanac.

Reshaping itself to draw the desirable Boomer market, the timeshare industry has created more flexible timeshare ownership structures, more appealing amenities such as professionally designed golf courses and affiliations with leading brand names such as Marriott and Disney and organizations such as the Professional Golf Association, Bear Stearns says. Further, just 3 percent of income-qualified households own timeshares, while analysts believe the participation level could rise to 15 percent.

Bear Stearns has a "Buy" rating on Vistana, Inc. (NASDAQ: VSTN).

Lodging

With declining occupancy rates and slower growth in average daily room rates and revenue per available room, the lodging industry faces challenges, according to Jason N. Ader. But some lodging operators will prosper and are worth investors' interest, he adds.

Although the industry added substantially to room supply in the last several years, there are some markets and segments where demand outstrips supply, Mr. Ader says. Investors would do well to focus on lodging companies with property concentrations in the urban east and west coast markets, where occupancy rates exceed the national average and new construction of hotels is extremely limited. Further, investors should examine the extended stay segment of the U.S. hotel industry, in which rapid new supply additions have been just as rapidly absorbed.

Bear Stearns maintains a "Buy" rating on Starwood Hotels Resorts Worldwide (NYSE: HOT), Host Marriott (NYSE: HMT) and Sunstone Hotel Investors (NYSE: SSI). Among companies in both lodging and gaming, Bear Stearns maintains a "Buy" rating on Sun International Hotels Ltd. (NYSE: SIH).

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