Melco Resorts & Entertainment Chairman and CEO Lawrence Ho is the latest to indicate that the cost of developing a metropolitan integrated resort in Japan is likely to push beyond US$10 billion.
In an interview with Bloomberg over the weekend discussing his Japan ambitions, Ho explained the reasons behind his company’s decision to focus its efforts on Yokohama but noted that building in a major Japanese city would also come with increasing costs.
“We’ve spent the most of our time and resources in the last couple of years in Yokohama which is conveniently situated 30 minutes from Tokyo and is very close to Haneda airport,” Ho said.
“To build the greatest and most amazing IR in the world in Japan needs to be situated in a city where the infrastructure and accessibility is there. That’s why we’ve declared that we are Yokohama First. Our main and only focus is on developing in Yokohama.
“Our view is that a resort in Yokohama will cost at least US$10 billion and will have some of the latest technological advancements in terms of smart cities and technologies.”
Ho’s comments echo those of Las Vegas Sands President and Chief Operating Officer Rob Goldstein during a recent earnings call in which he described US$10 billion as just “the starting point” for a Japan IR, stating “I don’t think anybody’s going to do it for less than US$10 billion, unless you’re going to do something sub-par.”
Like Melco, Las Vegas Sands is also eying Yokohama as a likely home for its primary IR bid although Goldstein admitted during the October call with analysts that, with estimated development costs now pushing as high as US$12 billion, gaining sufficient return on investment is no longer a given.
Not so Ho, who told Bloomberg that growth opportunities such as Japan will always be Melco’s key investment strategy.
“Our focus is always going to be on organic growth,” he said. “Over the last few years we’ve given significant capital back to the shareholders via dividends, share buybacks, but at the same time Melco will always be a growth company and the biggest growth company in my lifetime will be Japan.
“We will continue to look at how best to deploy the capital but again our first priority will always be to focus on organic growth.”