While the world’s big integrated resorts operators have been flexing their muscle in the race to win one of Japan’s first casino licences, flying somewhat under the radar has been Sega Sammy Holdings – the sole Japanese company to lead a major metropolitan bid of its own. Now, having finally lifted the veil on its IR vision in January, Sega Sammy appears to be leveraging its Japanese identity in the battle for Yokohama.
It was just a few days before the 1st IR Expo in Yokohama on 29 and 30 January 2020 that Sega Sammy released the first genuine insights into its proposed IR development in Yokohama, including an artist’s impression and details of an alliance with UK architecture and design firm Foster + Partners.
Coming long after the likes of Las Vegas Sands, Melco Resorts & Development and Wynn Resorts began pushing the key features that would set their individual IRs apart, the fact that a Japanese candidate was making its presence felt inevitably attracted some extra interest.
While Japanese financial services firm Orix Corp has teamed up with MGM Resorts International in Osaka, Sega Sammy is the only Japanese company to step up as lead IR operator, and with a major metropolitan location as its target.
Sega Sammy President and Group COO Haruki Satomi wasted no time in highlighting his origins when addressing a jam-packed conference room at the expo, describing in detail the social and economic issues currently facing the city of Yokohama: the four -hour average tourist stay, 85% day-tripper rate and stagnating population.
“People come for a concert in the Yokohama arena, have a meal in Chinatown, stop by the Minatomirai malls, and go home,” he explained.
Despite being the second most populous city in Japan with around 3.74 million residents, Yokohama’s population has already shown signs of decline due to an extremely low birthrate and aging population. The city predicts a financial deficit of JPY 66 billion (US$611 million) by 2027, and with decreased tax revenue, an IR is seen as a unique opportunity to address these negative trends.
Satomi, for his part, calculates that a Yokohama IR would attract, “Annual visitors of JPY 20 million, employment for 20,000 and tax revenue of JPY 80 billion (US$730 million).”
Sega Sammy’s obvious disadvantage in the Yokohama IR race is its lack of experience in building and operating the type of large-scale, luxury casino resorts exemplified by its rivals. How, for example, can they compete with Las Vegas Sands, whose portfolio includes the second biggest hotel in the world in The Venetian Las Vegas, seventh largest building in the world of any kind by floor area in The Venetian Macao, and the world’s most profitable casino (and global tourism icon) in Singapore’s Marina Bay Sands?
But Sega Sammy has been nothing if not prepared. In July 2012, around four-and-a-half years before Japanese lawmakers kicked off the IR race in earnest by signing the Integrated Resorts Promotion Act into law in December 2016, the company signed a joint venture agreement with Korean casino operator Paradise Co to develop an integrated resort in Incheon, Korea. The resulting US$1.4 billion property, Paradise City, of which Sega Sammy holds a 45% stake, opened in 2017 with the Japanese firm making no secret of the fact that its involvement in the project is primarily for the purpose of learning how to develop, open and operate an integrated resort.
In Yokohama, Satomi said, “We want to create a stay-type destination selected by world tourists, operated by Japanese with ample on-site experience,” indicating the company’s concept of utilizing the know-how it has cultivated in Korea, and particularly of attracting Japanese VIPs and the South Korean wealthy class.
Sun Tzu’s Art of War states, “Know thy enemy and know thyself and you will not fear a hundred battles.” It is this strategy Sega Sammy is relying on to spring a surprise, with the business plan presented by Satomi in Yokohama careful to exhibit familiarity with the current reality of the Japanese market. An operational plan covering safety and security measures, and a development plan evoking Japanese culture while considering environmental impact, are Satomi’s keys to success.
Certainly the company appears to have learnt a few parlor tricks from its competition, announcing in January a series of eye-catching partnerships that paint a clear picture of its Yokohama ambitions.
Those partnerships begin with Katana, the marketing group led by Tsuyoshi Morioka – renowned for reversing Universal Studio Japan’s flagging fortunes – and extend to Foster + Partners, an English architecture firm whose designs include the Great Court at the British Museum, Reichstag New German Parliament in Berlin and Apple Headquarters in the US. It was with Foster + Partners by their side that Sega Sammy displayed its conceptual IR drawing to the Yokohama crowd.
There is also a collaboration with Kyoto Kitcho, the longstanding Japanese restaurant awarded three Michelin stars for 11 years in a row.
“Food has to evolve with the times,” said head chef Kunio Tokuoka. “An IR is a great opportunity to popularize Japanese cuisine and Japanese culture.”
Satomi noted, “Tokyo has more Michelin stars than any other city in the world, but how many does Yokohama have? There isn’t even a 5-star hotel.”
Envisioning a resort that serves as the driving force of Yokohama’s revitalization, Satomi points to “a city that continues to create new value and prosperity through economics, culture and arts, using the environment as its axis.”
It’s an ambitious play from Sega Sammy against the collective might of its international rivals. Only time will tell if its strategy can pay off.