Nagasaki Prefecture signed a basic agreement with Casinos Austria International Japan (CAIJ) on 30 August for the development of an integrated resort at Huis Ten Bosch at Sasebo City, Nagasaki. But the process has been controversial to say the least, with both of CAIJ’s rival bidders crying foul on the decision.
In this five-part special report running Monday to Friday this week, we take a closer look at Casinos Austria and speculate on what might happen from here on the road to creating Nagasaki’s first ever integrated resort.
Mon 13 Sep 2021 Part 1: Introduction and background
Tue 14 Sep 2021 Part 2: IR operational capabilities
Wed 15 Sep 2021 Part 3: Financial capacity
Thu 16 Sep 2021 Part 4: Meeting Japan’s expectations
Fri 17 Sep 2021 Part 5: Conclusions and challenges
PART 4: MEETING JAPAN’S EXPECTATIONS
Today let’s look at some of the more subjective issues around the Japanese IR industry and what will be ahead for CAIJ in delivering what the Nagasaki prefectural and Japan national governments will want in an IR in Nagasaki.
Nagasaki has publicly stated its assumed IR annual visitation at 8.4 million people. For this to happen the IR would have to absolutely spectacular, basically a must-visit destination for almost everyone visiting Kyushu or even the western end of Japan. The total number of guests staying at accommodation in Nagasaki prefecture in 2019 was just 580,000, so Nagasaki is aiming for a more than ten-fold increase – and that assumes every single visitor to Nagasaki Prefecture makes their way to Sasebo to visit the IR.
Nagasaki is considered so “far away” in Japan that it’s not really a day trip destination. Combine this with the fact there is no bullet train and the nearly a two-hour drive from the nearest major airport (at Fukuoka), and CAIJ has a very major challenge indeed to meet that 8.4 million visitation number.
The next issue relates to MICE delivery. Nagasaki has stipulated “world-class and easy-to-use” competitive conference facilities to “attract domestic and overseas visitors,” including a “one-of-a-kind venue and exhibition hall that constantly introduces cutting-edge ICT technology.” This includes a 6,000-seat international conference hall and 20,000 square metres of exhibition hall area.
To put that requirement into perspective, we are talking more than triple the size of the Venetian Macao ballroom which claims a sit-down banquet capacity of 5,000 people. By way of comparison, Casinos Austria manages around 2,000 square meters of event space in all its properties in Europe combined. Given how difficult it is to travel to Nagasaki, and how expensive Japan is compared to the alternatives in Asia, filling this kind of MICE space is going to be very difficult. And no less difficult will be servicing a MICE offering like this, especially for a company with no experience in large scale MICE.
CAIJ and Nagasaki have announced the hotels will be operated by a “foreign-affiliated hotel brand that operates high-quality hotels in Japan and overseas.” As most senior IR executives know, when the hotel is operated by a company separate to that operating the gaming and resort, problems usually ensue. Most successful Asian IRs operate their own hotels and/or merely license international hospitality company brand names, while operating the hotels themselves.
Nagasaki and the national government have made much of the need for the IR to make strong CSR contributions in regional growth and revitalization, cooperation with local businesses, local procurement and contributing to the local economy. While Casinos Austria does have an established CSR program in Europe, we’re yet to see any significant engagement with the community in Nagasaki, ironically unlike both of its RFP rivals in Oshidori and NIKI. Casinos Austria didn’t even maintain a dedicated office in Nagasaki during the RFP process. It will need to address this quickly.
Gambling addiction, problem gambling countermeasures and having the “cleanest and most regulated IRs in the world” has been repeatedly emphasized in Japan. While Casinos Austria is one-third owned by an Austrian sovereign wealth fund, this government association hasn’t kept it free of compliance issues or controversy over the years. A quick google search turns up several cases where Casinos Austria found itself in court on a range of allegations, including some relating to gambling addiction issues. The most notable and recent example of this is the so-called “Austrian casinos affair”, which is beyond the scope of this article but can be easily googled for those interested. Casinos Austria will need to convince the Japanese regulator these kinds of issues are well behind it.
Tomorrow in part 5 we conclude this five-part series and summarize the challenges ahead and the way forward for CAIJ in Nagasaki …
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