In November 2019, Hokkaido Governor Naomichi Suzuki officially withdrew the prefecture from Japan’s IR race and along with it the hopes of operators who had named Hokkaido as their location of choice to develop an integrated resort. But the race has not been run for all.
With COVID-19 impacting timelines nationwide and Las Vegas Sands recently withdrawing its bid in Yokohama, Hard Rock Japan President Ado Machida offers IAG his insights into the current situation in Japan and reveals his company still has its eyes on the prize.
IAG: We’ve seen some of the biggest operators in the world pull out of the race to develop a Japan IR, the most recent being Las Vegas Sands, and we haven’t heard much from those who were eyeing Hokkaido since the governor determined not to pursue a bid last November. Where does Hard Rock International currently sit as it related to Japan?
Ado Machida: It is unfortunate that some operators have decided to pull out of Japan, but we at Hard Rock remain optimistic that as soon as we see light at the end of the tunnel with respect to COVID-19, we can resume our activities to garner an IR license in Japan.
The fact remains that Japan is still a highly desirable place to visit for many foreign tourists, and the proposition of an IR in Japan is still a very attractive one.
While we understand many of these frustrations operators have to deal with, by operating over 250 entities in 75 countries Hard Rock has seen these types of frustrations in many, many jurisdictions. In the end, with the proper engagement with government and industry, it works itself out.
IAG: Many analysts seem to indicate that LVS pulling out of Japan is an indication that Japan’s regulatory environment is shaping as unrealistic for operators to be profitable. What does Hard Rock think?
AM: The concept of building an IR in any new jurisdiction or country is always a daunting one. There are cultural, legal, language and societal issues to consider, and there is never a one size fits all scenario.
We believe Japan’s attractiveness as a highly sought after destination is still valid and IRs will be especially important after COVID-19 as the country seeks to find new and innovative ways to attract foreign tourism.
Our aim has always been to provide a uniquely Hard Rock experience tailored for the Japanese market, and as a company that has been in Japan for over 35 years with our Japanese partners, we believe we are uniquely qualified to bring that experience to life.
Of course there will be bumps in the road. In fact, we have yet to see and understand the Central Government’s fundamental policy as it relates to an IR. We certainly anticipate there being many changes from the draft policy in light of the devastating impact COVID-19 has had on the hospitality industry, not only in Japan but worldwide.
IAG: Do you expect COVID-19 will have changed the landscape for Japan’s IR industry?
AM: We do not believe the world will just go back to normal after this. But, we do believe there will be a new normal as it pertains to customer experience. We need to assure our customers of safe accommodations, safe dining options and safe entertainment venues and experiences without being anxious about their health and wellbeing.
Our industry is also not immune to the changes and economic impact of COVID-19. Look at Singapore, Macau and Las Vegas. It certainly will have a dramatic effect on our views on new developments and investments, including in Japan. I believe COVID-19 more than the Japanese Government’s IR position was an instigating factor for some operators to withdraw at this time.
But we are continuing to work with both the Central government, as well as prefectural governments, to understand their concerns on recovering from the devastating effect of COVID-19 and still plan to design, build and open an IR that will be an enduring and recognizable symbol for Japan in the future.
IAG: The Yokohama and national governments have said that the withdrawal of LVS will have no impact on the IR process or timeline. What do you think?
AM: I think it is still premature to make any decisions on the IR process or timeline. Japan has yet to determine how best to decrease the number of COVID-19 infections, and after that how best to recover economically. We don’t know how long that will take.
The Central government should and will have the best interests of the Japanese people at heart regardless of a timeline. And that is the right approach.
We believe our IR project in Japan will be an enduring and recognizable symbol for the future. We want to ensure it is done right, will meet any future requirements, such as any new potential health-related requirements due to COVID-19, and is done in a way that will last for many, many years to come.
We certainly do not believe these are projects that should be rushed just to accommodate an arbitrary timeline that did not take into account what we are experiencing today.