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 5: CONCLUSIONS AND CHALLENGES
It’s been an interesting week examining what’s ahead for CAIJ in delivering its IR in Japan. Today, we summarize parts 1 to 4 of this series, form conclusions, outline the challenges and present a road map for what must happen in Nagasaki for an IR to eventually open its doors.
- Develop the “area development plan”
CAIJ needs to work with Nagasaki Prefecture to develop the “area development plan” which needs to be submitted to Japan’s Ministry of Land, Infrastructure, Transport and Tourism by 28 April 2022. This collaborative process will be a challenge, requiring goodwill and mutual trust and understanding on both sides, especially give the enormous cultural and business practice differences between Japan and Europe.
- Start thinking like a major Asian-style IR operator
Casinos Austria has been running small European-style club casinos for decades. It is in their DNA. That must go totally out the window and they must start thinking big – thousands of hotel rooms, hundreds of gaming tables, thousands of slot machines, a hundred F&B outlets. Ten thousand staff. Multi-billion-dollar budgets. All for one property. This will require a change of mindset and hiring senior executives with a wide range of skills and experience on this side of the planet.
- Get the financial piece resolved early
As pointed out on Wednesday, the financing issue here is huge. Casinos Austria do have some financing capability amongst their senior management, but they will need more – much more. They will need to quickly hire people experienced in dealing with Japanese banks and people who have raised billions in Macau, Singapore and/or Las Vegas.
- Access dynamics
CAIJ are going to have to figure out how to efficiently get over 20,000 people a day (and their money) in and out of their property at Huis Ten Bosch. Nagasaki has never seen even a tenth of this kind of visitation. Given the transportation issues of the region, this is no small task and could be the make-or-break issue.
- MICE
CAIJ must admit to itself it doesn’t have the MICE capabilities and somehow hire them in internationally – for MICE experts with Asian IR experience. MICE in Japan is very underdeveloped so the skills won’t be found locally. Again, this needs to be done early as the only way there is any chance of success is to integrate the MICE strategy piece during the development and construction phase, not as an afterthought.
- Hospitality
CAIJ also must admit to itself it doesn’t have the hotel know-how to run a hotel with over 1,000 rooms. But farming off the responsibility to another company without gaming experience won’t be effective either. The only way here is to bite the bullet and hire in senior executives who have worked in Macau, Singapore, Manila or Las Vegas and build a team as quickly as possible. And then actually listen to them.
- Japanese-style CSR
Just copying and pasting the CSR program from Europe won’t work. The companies to look at here are the six Macau concessionaires, who obsessively focus on their CSR programs, especially right now with the Macau re-licensing on the horizon. To do this and do it well will involve a concerted three-part effort – first, CAIJ should take the best from what it does in Europe, second, visit and learn from Macau’s excellent CSR programs, and finally, customize it all for Japan (and specifically Nagasaki) by hiring local Japanese CSR experts and changing their operational DNA to start implementing in the Japanese way.
- Squeaky clean obsessive compliance
CAIJ has long operated as a monopoly in Austria, and we all know that monopolies lead to complacency. Given (1) the scandals which have already happened in Japan such as the 500.com scandal, (2) the angst over the Nagasaki RFP process with allegations of corruption flying, (3) the enormous IR-hesitancy of the Japanese people, (4) question marks on the internet around Casino Austria’s own track record, and finally (5) Japan’s oft-stated desire to be the “cleanest IR industry in the world”, the company needs to not only be squeaky clean but unquestionably be seen to be so. Just look at Crown Resorts in Australia to understand what can go wrong.
There’s an eight-point road map to success in Nagasaki. Now let’s sit back, enjoy, and see how it all plays out!
Have any feedback on this five-part series? If so, please contact us.
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