Melco Resorts & Entertainment’s Chairman and CEO, Lawrence Ho, says the company remains fully committed to developing an integrated resort in Yokohama while expressing some surprise at the reasons given for the shock withdrawal of Las Vegas Sands (LVS) earlier this week.
LVS announced on Wednesday they were pulling out of the race for a Japan IR, with Chairman and CEO Sheldon Adelson pointing to restrictive licensing and regulatory measures as making such an investment untenable.
Asked about its rival’s departure and Melco’s own plans moving forward during Thursday’s 1Q20 earnings call, Ho noted that the “rules of the game” in Japan gad been established some time ago.
“Nothing has been changed in the last year or two so I can’t speak to that. I can’t speculate why LVS is not pursuing the opportunity,” he said.
“We’ve been working on Japan for a very long time, 15 years, and we continue to think that outside of Macau, Yokohama remains the most attractive IR destination.
“Even with COVID, our local teams have continued to engage with the Yokohama officials and authority. Ever since Yokohama declared its candidacy, we have said that we are Yokohama first and we’ll continue to do that.”
While Ho added that he didn’t expect the development price tag in Yokohama to dip below US$10 billion no matter how many candidates remain in the IR race, Melco President Evan Winkler did address concerns that Japan’s short 10-year license period remained one of the biggest stumbling blocks for operators given the high cost of development and hesitancy from banks to issue more than 50% of the debt.
“I think if you took the perspective that at the end of the 10 years your resort might go away, it would obviously change your investment dynamic,” Winkler said.
“But we’ve operated in markets, and we’re operating in one now, where there is technically a finite life to a license. And what we’ve found is if you’re a good partner to the government and do a good job in terms of resorts, CSR and other things that we do very well, your expectation is that the license would perpetuate.
“So you will have a longer horizon than the end of the license when you look at the investment and I think that’s consistent with how we view Japan, which is a market that we want to be in for the long term.”