Fierce race in Japan for 3 integrated resort permits

On Sept 24, Japan's tourism minister Kazuyoshi Akaba revealed the eight interested parties seeking to win the right to host one of Japan's three integrated resorts. PHOTO: REUTERS

TOKYO - The fierce race to win the right to host one of Japan's three integrated resorts (IRs) is heating up, with at least eight areas keen to bet on the potential economic and tourism boom.

Tourism minister Kazuyoshi Akaba said on Tuesday (Sept 24) that, based on a Japan Tourism Agency survey, the eight interested parties are Hokkaido, Chiba city, Tokyo, Yokohama, Nagoya, an alliance of Osaka Prefecture and Osaka city, Wakayama Prefecture and Nagasaki Prefecture.

Just four of these eight areas - Yokohama, Osaka, Wakayama and Nagasaki - had previously announced their bids to host the IRs, which are slated to open around 2025.

The Japan Tourism Agency survey, conducted between Sept 9 and 19, covered all 47 prefectures and 20 ordinance-designated cities.

It is not binding, although agency officials have begun interviewing local governments to confirm the status of their preparations.

Yet more cities may place bets: Kawasaki city just south of Tokyo, the coastal Hamamatsu city in Shizuoka Prefecture, and Kitakyushu city in Fukuoka Prefecture are among those that have reportedly not ruled out a bid.

IRs - mega-complexes with casinos, hotels, shopping malls, entertainment facilities and exhibition spaces - have been controversial in Japan over fears that they may fuel gambling addiction.

Analysts, however, say these fears are overblown given the abundance of pachinko slot machine parlours, and argue that IRs have the means to keep problem gambling in check.

Forecasts show that the Japan market will likely surpass Macau and Las Vegas to become the world's strongest casino market, and the national government wants to capitalise on IRs to sustain tourism momentum beyond the 2020 Tokyo Olympics and 2025 Osaka World Expo.

Japan has set a goal of achieving 60 million visitors and overall tourism spending of 15 trillion yen (S$190 billion) by 2030. The country welcomed 31 million visitors in 2018.

Other benefits, say local governments that are keen on IRs, include new investments, job creation and sustained economic momentum.

The national government said in a basic IR policy issued this month that it will look at factors such as the IR operator's business soundness and financial stability, as well as how far it has forged close-knit ties with the local communities.

The IR operators should also commit to making use of its casino business profits to improve the range of IR offerings and to give back to the local community, while also ensuring that gambling risks can be reliably and effectively curtailed.

Meanwhile, in what may give metropolitan areas an edge, the government will consider the host site's connectivity to other major cities in Japan and overseas, as well as look at how effective its measures are to improve traffic access and develop infrastructure.

Other criteria include whether the IR design is of "unprecedented scale" and "can be a new regional symbol", and whether it meets Japan's ambitions to grow its Meetings, Incentives, Conferences and Exhibitions (Mice) sector.

Toyo University tourism management expert Kazuaki Sasaki noted that the local governments are at different stages of preparation, but added: "These stipulated standards are quite high, and it remains to be seen how far each administration can achieve them."

He told The Straits Times that it will be key for local governments to work with IR operators to provide evidence-based explanations in an easy-to-understand manner to quell local opposition, noting that "many disagreements have been based on emotion and sensationalism".

Mr Brendan Bussman, director of government affairs at Las Vegas gaming and hospitality consultancy Global Market Advisors, said: "The potential bidders that put forward the greatest understanding of the market and ability to grow those areas for Japan will have the best shot at securing a licence."

Osaka, which has long been deemed a front runner, had at one point drawn the interest of as many as seven IR operators.

But the official entry of Yokohama, a port city about 45 minutes by train from central Tokyo, into the race has reportedly whittled down the list to just three: Las Vegas-based MGM Resorts International, Macau's Galaxy Entertainment and Genting Singapore, which developed Resorts World Sentosa.

The entry of Tokyo, Chiba and Nagoya could further shake things up.

Osaka Governor Hirofumi Yoshimura said last week that the Greater Tokyo area, comprising Tokyo, Chiba and Yokohama, is a formidable contender, but added: "Osaka has had first-mover advantage over other areas, and I will do my best not to lose."

Among those drawn to Yokohama is Hong Kong-based Melco Resorts and Entertainment, whose chief executive Lawrence Ho praised its "location, communication links, vibrancy and pioneering spirit".

Chief executive Sheldon Adelson of Las Vegas Sands, the developer of Marina Bay Sands, said it will drop out of the Osaka race and instead set its sights on Tokyo and Yokohama, where an investment "gives us the best opportunity" for returns on invested capital.

A survey by the Tokyo Metropolitan Government last year reportedly found that an IR in the capital could ring in annual revenue of 400 billion yen and economic ripple effects of another 700 billion to 900 billion yen.

The city of Chiba, also about 45 minutes by train from central Tokyo, wants to host an IR in its Makuhari district, which is near the Tokyo Disney Resort and home to the Makuhari Messe convention centre that hosts major events like the Tokyo Game Show.

Nagoya, Japan's fourth-largest city by population, is due to host the Asian Games in 2026. A planned maglev train line slated to open by 2027 will cut travel time between Tokyo and Nagoya to 40 minutes, from the current 95 minutes.

"We still have roughly a year before the local race begins so there is lots of game to be played," Mr Bussman said.

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