Two to Tango

Diposting pada

Ahead of the mayoral election on 22 August that will determine Yokohamas IR future, Inside Asian Gaming takes a closer look at the two candidates global IR giants Genting Singapore and Melco Resorts & Entertainment.

The clock is ticking on Japans IR dream, with the central government to start accepting applications from candidate locations and their chosen operator partners from 1 October 2021.

The question remains: will Tokyo one day put its hand up to develop an integrated resort?

With the following passage through the upper house of the IR Promotion Bill in December 2016 and the IR Implementation Bill in July 2018, the government will issue licenses for up to three locations to develop Japans first integrated resorts, which will include casinos. It has long been expected that the three locations will comprise two large metropolitan areas and one regional area with the primary goals of boosting tourism and reinvigorating local economies. However, with deadlines approaching, it remains to be seen whether there will even be two metropolitan locations available to choose from. While Osaka, among the first to put up its hand for a large-scale IR, has long been considered all but a done deal, the jury is still out on the only other metropolitan candidate in the race, Yokohama.

As it stands, Yokohama is the jewel in Japans IR crown. Located about half an hour by train from Tokyo Station, the city claims a population of around 4 million people but is easily accessible to the nearly 40 million people that comprise the Greater Tokyo metropolitan area.

Resorts World Sentosa has proven hugely successful for Genting Singapore.

It was for this reason the worlds biggest IR operators flocked to Yokohama when Mayor Fumiko Hayashi officially declared the citys candidacy in August 2019. The list of those operators that abandoned Osaka in favor of Yokohama leaving only MGM Resorts behind included Galaxy Entertainment Group, Genting Singapore, Las Vegas Sands, Melco Resorts & Entertainment and Wynn Resorts.

Today, only two of those candidates Genting Singapore and Melco Resorts remain, with the others having withdrawn at various stages over the past 15 months, attributing their change of heart to either the economic impact of COVID-19 or Japans strict regulations.

Yet even as Yokohamas RFP process gathers steam, two pressing issues threaten to stop this IR train in its tracks.

The first is Tokyo. Japans capital city has never put its hand up to host an integrated resort, but it has never ruled itself out either. Rumors have abounded that Tokyo will eventually enter the fray and might have done so already if it werent for the not-so-small distraction of the Tokyo Olympic Games. If so, then it seems the 12-month delay to the Olympics as a result of the COVID-19 pandemic may have scuppered any chance of Tokyo declaring itself a late arrival at the IR starting gates.

Thats good news for Yokohama in the short term given that, under Japans IR legislation, the government must wait at least seven years after issuing these first three licences before it can consider issuing any more. Even so, the threat of Tokyo one day building an IR of its own and stealing away a hefty chunk of Yokohamas customer pool will always remain.

More pressing for Yokohama however is the upcoming mayoral election on 22 August. Covered in more detail in another article in this issue by IAG Japan journalist Shintaro Kamimura, the result of this election will either make or break Yokohamas IR plans, with a gaggle of anti-IR candidates having declared their intention to bury the citys bid should they win office.

Thats a shame, according to Yokohama native and Managing Director of Japan-based consultancy Bay City Ventures, Joji Kokuryo, who believes the real focus should be on the citys socio-economic concerns.

Its unfortunate that IR has become the main discussion topic when as a city and its one of the biggest cities in Japan there are a lot of other issues at hand, Kokuryo says.

With all of this for and against IRs, what has been lost are the original reasons Yokohama wanted to develop an IR in the first place. There is a financial conundrum in Yokohamas future, and how that will be solved is something that must be discussed. Had this been raised before the last election as the key reason for an IR, maybe people would have been more accepting.

Among the mayoral candidates opposing IR development is 55-year-old Hachiro Okonogi, whose decision to run on an anti-IR platform, announced in June, sent shockwaves through the ruling Liberal Democratic Party given he was not only one of their own but also the Minister in charge of the Japan Casino Regulatory Commission.

In fact, until very recently, only one of the half-dozen confirmed candidates former House of Representatives member and independent candidate Mineyuki Fukuda had expressed a pro-IR stance.

The mood has since shifted considerably following confirmation on 15 July that Mayor Hayashi the driving force behind Yokohamas IR bid would run for a fourth consecutive term, as an independent. Although the LDP, which had endorsed Hayashi in previous mayoral contests, announced it would not do so again due to the three-term limit stipulated in its internal charters, the party has also opted against backing its own Okonogi, offering members a free vote instead. With the shackles now unleashed, at least part of the city council is expected to support Hayashi, giving fresh momentum to a bid that had looked like it was on the ropes.

That leaves the two remaining candidates in Yokohamas IR race with plenty to fight for, so lets take a closer look at what each has to offer.


There is no doubt that when it comes to global casino and integrated resort exposure, nobody comes close to Genting’s spanning of all corners of the globe. From its original Malaysian resort in the highlands that now bears the Genting name to Singapores Resorts World Sentosa, casinos in England and Egypt and a handful of properties across the United States including the recently opened US$4.3 billion Resorts World Las Vegas the company has grown to be a well established global force in the IR game. The single very notable gap in its domain is Gentings lack of a gaming property in the worlds largest IR hub Macau.

Yet it comes as no surprise that Genting has placed the Yokohama IR bid under its Singapore subsidiary.

Niall Murray, Chairman of boutique integrated resort consulting firm Murray International and an industry veteran with experience spanning decades from Las Vegas to Macau, believes this immediately gives Genting a head start in Yokohamas IR race.

The Japanese Government wants to mimic Singapores IR model of success, he explains. Firstly, Japan built its Basic IR Laws around Singapores strict legal framework, adding in some tough clauses from other jurisdictions to create the most tightly regulated and protective gaming legislation in the world.

Japan believed that by doing this they would attract the worlds leading operators while at the same time protect their citizens, communities and local businesses, and replicate the success of Singapores IR Industry.

Gentings track record in Malaysia, Singapore, the Philippines, United States, cruise lines (via Genting Hong Kong) and its recent opening in Las Vegas will win lots of points with the Yokohama and central governments.

Likewise, its strong relationship with the Singapore government, its political savvy, and its ability to win one of the two gaming licenses in Singapore against very tough international competition and operate successfully all point towards Gentings strengths, abilities and proven track record.

On the downside, it has now been 10 years since Resorts World Sentosa last outstripped its Singapore rival, Marina Bay Sands, for annual gross gaming revenues. In Singapores two-horse race, it is undeniable that Marina Bay Sands is the gold standard, holding 60% market share as of 2019 (pre-COVID) and having built an integrated resort now well established as the iconic addition to the skyline the government envisioned when it first chose to issue two casino licenses in 2005.

While Gentings Singapore and Malaysian IRs have nevertheless proved wildly successful over the years, there are concerns over the profitability potential for two of its three US casinos RWLV and Resorts World Catskills. Likewise, the companys cruise ship arm Genting Hong Kong has been battered by COVID-19 and recently announced a financial rescue package in partnership with creditors to help it avoid insolvency.


With operations spread globally and a vast domain of subsidiaries under its umbrella, Genting has long mastered the art of moving financial resources around to suit its needs. One need only look as far as Empire Resorts the entity that owns troubled New York casino Resorts World Catskills, which has been kept afloat by more than US$210 million in funding from Genting Malaysia over the past 18 months as an example.

Genting Group’s Malaysian IR, Resorts World Genting

Nevertheless, it is widely accepted that Genting and its Japanese consortium partners (more on them later) not only have a substantial war chest at their disposal but a variety of options to raise capital, be it locally or via foreign investment.

Despite spending US$4.3 billion on RWLV, opened in June, talk of a potential US listing opens the door to the worlds largest investment market, not to mention the fact that Genting already boasts listings on the Malaysian, Singapore and Hong Kong exchanges.

When it comes to Yokohama, it seems unlikely that financing would be an issue that stands in Gentings way.


Genting Singapore brings strong MICE experience to Yokohama, with its Resorts World Sentosa Convention Center and accompanying facilities considered among the best in the region.

Genting have solid mid-sized to large MICE experience in Resorts World Sentosa and Genting Highlands, explains Murray.

They will also gain significant MICE experience over the coming years with RWLV. Las Vegas is the MICE capital of the world and [Genting] will need to learn, adapt and grow in order to prosper.

RWLV also happens to boast a direct connection to the Las Vegas Convention Center via an underground transportation system developed by Elon Musk whereby all-electric Tesla vehicles transport passengers back and forth in just two minutes.


Gentings complicated ownership structure, which sees Chairman and CEO Lim Kok Thay and his family hold varying direct and indirect stakes across multiple entities in more than half-a-dozen global jurisdictions, may give Japanese regulators some pause. There is also the question of where the companys true focus might lie, particularly given the US$4.3 billion spent on RWLV and other not-so-small US ambitions in New York and Miami.

Nevertheless, the fact that the company passed probity checks in Nevada speaks highly, as does its relationship with regulators in Singapore another highly regulated jurisdiction.

Genting are a proven entity in Singapore, having won the bid, developed and opened a highly successful IR, and won approval for a license extension and further development, says Murray.

Also, Genting does not operate in Macau. It has been suggested that the Japanese government may be happier to approve operators without operations in Macau.

For the record, while Genting has never run gaming operations in Macau, Genting Hong Kong does boast a wholly-owned Macau subsidiary, Genting Macau, which has been developing a hotel alongside Macaus Nam Van Lake. However, Genting Hong Kong sold 50% of its stake in Genting Macau last November and has flagged the likely sale of its remaining stake in the future to help pay off some of its US$2.6 billion in debt.


Genting Singapore named its five Yokohama IR consortium partners in June, a list notable for the presence of Japanese gaming firm Sega Sammy Holdings.

Its difficult to know exactly what active role, other than being an investor, Sega Sammy might play in the consortium given that its experience is limited to pachinko machine development an industry set to be excluded from Japans casino floors and a 45% stake in Paradise City, a foreigner-only IR in Incheon, Korea. Sega Sammy has stated that its Korean interest is primarily a means of gaining IR operations experience to bring back to Japan, but the partnership is clearly led by its 55% owner, Koreas Paradise Co. Paradise City has also been slow to ramp, reaching profitability only briefly since opening in February 2016.

Three of Japan’s “big five” construction companies are involved in Genting Singapore’s Yokohama consortium.

Those issues aside, the Genting Singapore consortium appears to be a strong one, including three of Japans big five architecture, engineering and construction companies in Kajima Corporation, Takenaka Corporation and Obayashi Corporation, plus Sohgo Security Services Co Ltd which provides security and disaster prevention services.


Murray considers the Genting bid to be particularly strong based on their global track record and proven success story in Singapore.

Gentings operating model has developed significantly over many years, has improved dramatically and adapted well to meet the regulatory and market needs of the new jurisdictions that it has entered, he says.

RWS pumped new life into the flagging, underdeveloped Sentosa island and helped fulfill Singapores tourism ambitions.

RWS raised the finance needed and partnered with world leading hospitality, retail, F&B and entertainment operators to create an integrated resort to meet the needs of the mid-level leisure, family and group tourist market in Singapore.

At the same time, RWLV is the first significant IR to open in many years, and Genting have managed to raise the bar once again with world-leading partnerships, exceptional facilities, amenities, offerings and state of the art technologies.

Although Genting Highlands (in Malaysia) has struggled to improve significantly and to meet international IR expectations and standards, Gentings recent operations are consistent, continually improving and evolving to meet the requirements of jurisdictions and the needs of their target markets.


Melco Resorts & Entertainment, listed on the Nasdaq and 55.8% owned by Hong Kong-listed Melco International Development Ltd, is one of six casino gaming concession holders in the integrated resort capital of the world, Macau.

Its Macau portfolio is led by City of Dreams a high-end IR located on the northern end of the Cotai Strip plus Studio City on the southern end of the Strip and Altira Macau, the companys original Macau property which opened in 2007.

Melco is also one of four IR operators in the Philippines capital city of Manila via its Entertainment City IR, City of Dreams Manila, and it is developing Europes largest IR, the 550 million City of Dreams Mediterranean.

At its peak, Melco has punched well above its weight in Macaus gaming space and beyond, with group-wide revenue reaching an all-time high of US$5.74 billion in 2019 with profit of over US$370 million.

City of Dreams in Macau was home to Macaus only long-term resident stage show, with the Franco Dragone-produced The House of Dancing Water filling seats for a full decade before becoming a victim of COVID-19 last year. It is also where youll find Morpheus, an ultra-luxury hotel opened in 2018 and featuring some not-so-subtle nods to Japanese culture, such as Japanese-style toilets in the bathrooms!

However, while both City of Dreams properties in Macau and Manila have been admirable performers for Melco, Studio City has never reached the same dazzling revenue heights of many of its Cotai peers, and Altira Macau, as a legacy property from Melcos former partnership with Crown Resorts (it was originally named Crown Macau), has contributed little to earnings for many years now.

Critics of Melco say the company has a history of over-spending and under-delivering, of letting impulse get the better of judgement, but others IAG spoke to say the companys commitment to Japan is admirable, with Melco arguably the most innovative and risk-taking IR company in Asia when it comes to ground-breaking modern design and breathtaking architectural elements.

For example, it was known at the Request For Concept (RFC) stage of their Yokohama bid that Melcos suite of offerings included no less than a museum, a water park and an awe-inspiring entertainment offering. The latter was courtesy of The House of Dancing Water creator Franco Dragone, and the other offerings similarly involved collaborations with the worlds best artists and creators.

Its this kind of high-end non-gaming offering that Melco prides itself on, with its focus on the premium customer. For proof, you need look no further than their four Michelin-starred restaurants at City of Dreams Macau, including 3-star Jade Dragon, and their 17 five-star Forbes awards for a host of restaurants and spas.

Aside from its Yokohama IR bid, Melco has promised to develop a hotel in the ski resort of Okushiga Kogen in Nagano prefecture.


With a market cap of over US$7 billion, Melco Resorts is undoubtedly positioned as one of the big players on the global integrated resort scene.

Melco Resorts & Entertainments flagship property, City of Dreams Macau.

Although COVID-19 hasnt helped analysts believe Melcos consolidated group-wide debt will reach US$7 billion this year the company still maintains access to some of the worlds strongest financial markets via Nasdaq and the Hong Kong Stock Exchange. More importantly, the potential profitability of a Yokohama IR some analysts estimate annual net profit at an eye-watering US$2.7 billion should ensure access to capital within Japan as well.


Although not traditionally noted among Macaus major MICE players, Melcos meetings and exhibition space is substantial nonetheless. It has access to a ballroom and function rooms at Grand Hyatt Macau at City of Dreams, a ballroom plus Studio City Event Center at Studio City and another ballroom with function space at City of Dreams Manila. Additional space is planned for both Studio City Phase II and City of Dreams Mediterranean, the latter to include 10,000 square meters of MICE facilities.

Melco is developing the 550 million City of Dreams Mediterranean in Cyprus.

However, IAG understands Melco has tapped at least one highly respected and very senior executive from Hong Kongs AsiaWorld-Expo, and possibly other leading names in Asias MICE world, to lead the development of their MICE offering in Japan.

In terms of global scale events, its rumored Melco is working with one of the worlds largest sports and entertainment management companies, which would have the potential to bring genuine tier-one events to a Melco Japan IR. Add to that the partnership Melco announced with Japanese tennis legend Naomi Osaka in 2019, naming her their Director of Sports, and you have some potential offerings that should be very tantalising to the powers that be in Yokohama.


Melco is licensed in three jurisdictions, having operated in Macau since 2007, in the Philippines since 2015 and Cyprus since 2019.

The companys Cyprus operations currently include four satellite casinos plus a temporary facility near the site of its 550 million City of Dreams Mediterranean development.


Melco Resorts has announced only one partner for its Yokohama IR bid so far, in the form of Japanese construction, civil engineering and real estate firm Taisei Corporation. Although Melco has remained tight-lipped in this regard since announcing its Yokohama First policy in 2019, IAG understands there is at least one more significant partner yet to be publicly announced as involved in the consortium.


Like Genting Singapore, Melco Resorts is one of only a handful of operators globally with the size and experience to develop and operate an integrated resort of the scale demanded by a city like Yokohama.

And while they are considered to be the underdogs in this particular battle, there is no doubting the commitment of Chairman and CEO Lawrence Ho to the Japanese cause.

Hos love of all things Japan is genuine, and he regularly points to the hundreds of trips he has made to the country over the years for business and pleasure. In fact, on one memorable occasion he even went so far as to promise relocation of Melcos headquarters should the company prove successful in its IR bid.

If we win a license to develop an integrated resort, I will personally move to Japan, my executive team will move to Japan and our head office will move to Japan, Ho said in May 2019.

Melco has promised to develop a Japanese IR that is the most technologically advanced and was the first to outline plans for state-of-the-art facial recognition technology when describing its early City of the Future concept back in 2017.

Studio City, Macau.

While Genting Singapore represents strong opposition, a more difficult obstacle to overcome may be the perception in Japan that Melco is a Chinese company, given its home base of Macau. In this regard, the Ho surname may also prove an obstacle, notwithstanding the fact that Lawrence Ho actually grew up and studied in Canada, graduating from the University of Toronto in 1999.

One thing is for certain, if innovation is what Yokohama wants, it could do far worse than taking a punt on Melco Resorts.


Last month IAG compared and contrasted the three candidates for the Nagasaki IR and offered our view on which we felt was best positioned to win that race. To pick a winner in Yokohama between Genting Singapore and Melco Resorts is a much taller order. Both companies are genuine IR companies with multi-billion dollar properties and decades of experience and specialized IR knowhow. Genting has the advantage of being (ostensibly at least) from Singapore (though really from Malaysia), as opposed to Melco, who will be seen as based in Macau but is really somewhat pan-Asian, even arguably North American. Yes, the Singapore model is what Japan is looking for, but Genting is really global, not Singaporean, and Japan is not acting like Singapore so it may not get the Singapore-style outcomes it seeks. Melcos perceived obstacle of being from Macau should not really be an obstacle Macau is the gold standard for IRs in the world today and is really quite different from the rest of China. All in all, these place of origin factors all seem to even out.

Financially, both are suffering COVID-related hardship, but both have the capacity, track record and financial wherewithal to raise the funds they need. Another chop.

Both have solid MICE capabilities, although not absolutely tier-1A MICE skills such as those possessed by Sands. Having said that, both companies are perfectly capable of delivering what needs to be delivered in Japan for MICE.

Neither company should ultimately have any probity issues. Both companies would undoubtedly pick up Japanese partners along the way in their respective consortia. Genting both gains and loses in having a Japanese company in Sega Sammy on board. They gain because Sega Sammy is the junior partner in the Paradise City IR; they lose because of that companys historical pachinko background. So thats yet another coin flip.

Genting may be perceived as the bigger and more global company, especially having just launched Resorts World Las Vegas. But the contrary argument is they may be spread too thin and wont have the laser-focus on Japan that Melco would.

Ultimately, it may come down to a kind of hare and tortoise or quality versus quantity choice.

The former, Melco, will offer an exciting and modern IR, likely to be trendy and exhilarating, even exotic and sophisticated, but in striving for the worlds best may take design and operational risks, which may or may not pay off. They will be focused on offering the crme de la crme. The latter, Genting Singapore, will be more steady-as-she-goes, taking an approach it would likely see as tried and tested to create a serviceable IR, but one that might occasionally be accused of focusing on getting a huge number of heads through the door and being not so special: yet another Resorts World (insert city name here).

Only time will tell which of the two Yokohama will choose.

The central government will accept applications from candidate locations between October 2021 and April 2022.