Integrated Resorts in Japan

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The afternoon of the ICE VOX conference contained two fascinating sessions relating to the IR opportunities in Japan.

These opportunities seem to have been imminent for decades now, but at this point, it does look like they are becoming a reality.

The first speaker, setting the scene, was Naoko Nomoto, from Tokyoesque, highlighting some of the differences between western and Japanese cultures and identifying issues which might be of interest to western operators considering entering the market. Naoko’s presentation was most interesting and picked up on some areas where operators would be wise to pay attention.

One notable point was the Japanese demographic breakdown; they have a perceived Gen X and Gen Z, but these are based on a subtly different timeline than the ones western operators might recognise, and the Japanese culture has other identifiable groups besides. Naoko also provided an interesting insight into marketing techniques in Japan – notably, the use and appeal of mascots (including what we might perceive as a surreal mascot for electronic tax returns), as well as deploying, in advertising, an interesting cross-section of age groups which would not be typical in western advertising.

The following panel session drew out some more cultural discussions, including the fairly negative perception of the IR plans amongst the general Japanese public. Johnathan Strock, of French operator Lucien Barriere, along with Andrew Tottenham, who is project managing their Japanese exploits, gave an overview of the Japanese legislative process and their progress with a prospective application.

The process has been in train for many years and now is moving toward actual licence awards. The scale of the potential IR projects that might ensure is staggering, with price tags of $15 billion being mentioned, although the first stage of the process is determining which cities will be able to offer an IR.

Johnathan and Andrew detailed how complex the process is and highlighted how it’s still something of a moving target as far as the regulatory regime is concerned.  Andrew told the delegates that the key factors determining viability were much the same as any other IR proposal: population demographics, internal and inbound tourism potential, and expectations of local government, particularly in terms of regeneration. It seems transport infrastructure is a particular concern in some of the relevant prefectures, with large quantities of people needing to be moved to the IR in a short space of time across what may already be overcrowded roads.

All these elements combine in the decision as to whether to attempt to secure the licences, and with a price tag attached to everything and a return demanded by potential investors, it’s a complex equation.

The responsible-gambling question is also a more complex one in Japan. We all know of Pachinko parlours, and while the debate about whether they are gambling or not continues, some addiction has certainly resulted, with limited treatment facilities in place.

Whether the IR projects will be able to assist in treatment of these issues, and whether they will be perceived to be capable of dealing with any responsible gambling issues they themselves catalyse, will be a critical success factor both in the application process and eventual operation.