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Japan: No prize for second

Professor Glenn McCartney by Professor Glenn McCartney
Sun 1 Sep 2019 at 18:32
Japan: No prize for second
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While the prize for winning one of the three Japan IR licenses on offer is substantial, there are consequences to consider for those who miss out, says Professor Glenn McCartney.

I once saw a slogan on a t-shirt that read, “Nobody remembers who came second” (accredited to athlete Walter Hagen). In a similar vein, several of the international entertainment and casino operators bidding for a Japanese casino license will ultimately fail in acquiring one of the three licenses to be awarded by the national government. Such losses could ultimately result in a profound ripple effect given the alliances each corporation will have formed by then.

Osaka has so far been the most hotly contested location by the world’s largest IR operators as they prepare their bids.

In early 2000, I was already in Macau doing market research and advising on casino development issues, and I well remember the 21 bidders (some didn’t qualify) for the SAR’s three original gaming concessions (later increased to six via sub-concessions), and the various lobbying efforts as each gaming company presented their pitches, IR architecture models and artists’ impressions to the Macau Government.

I recently referred to these documents during my presentation at G2E Asia this year on the re-tendering of Macau’s casino licenses, as well as the temporary committee set up by the Macau Government to set the bid criteria, scoring mechanism and to advise on the license winners. As the various Japanese cities start to roll out their Requests for Information (RFIs) with specific details and criteria, the casino operators will be in better positions to strongly present and tailor their cases with specific attractive attributes to the Japanese authorities.

There have been many IR seminars in Japan and I have spoken and provided training at some. The various issues discussed and of concern are not uncommon for jurisdictions considering casino tourism introduction or expansion, from responsible gaming to ensuring the development is a catalyst to maximize tourism and economic development. A constant though has been the speculation on possible time-frames from awarding the city the right to host an IR, to the choice of IR operator – and eventual opening thereafter.

Naturally there will be other construction, operational, staffing and local legislative variables that will determine exact opening dates. Each Japanese city will also be able to choose from several casino suitors. However (and naturally) there has so far been little reference to discussion afterwards from those who don’t get a license.

A total of 21 companies submitted bids for the three licenses originally offered for Macau casinos in the early 2000s.

Looking at bidding within tourism in the subject of event management and on those cities or countries bidding for a major event, research and analysis rarely examines the impact upon those who lose. The reflective questions for a city that fails to be granted an IR will be whether a bid should have been put forward in the first place given the negatives that ensue, such as bid cost and local community morale. In the corporate world, the loss of such a bid may negatively impact employee and investor sentiment.

Given the potential benefits, cities will put a lot of resources into emphasizing why they should host an IR given the strong competition from regional competitors. It will be vital that they ensure every box is (double) ticked to establish a winning proposition and highlight the unique features their competition may not have.

However, not every city has the resources, attractions or location to justify success. Similarly, most of those pitching for one of these limited Japanese casino licenses have impressive and convincing portfolios but only three can come out on top. It promises to be a hotly-contested campaign from each of these operators given how high the stakes are for both the winners and the losers.

Yokohama has now thrown its hat into the ring to host one of Japan’s first IRs.

I have listened to a broad spectrum of stakeholders in Japan. I debated with some colleagues and have also penciled in a few possible winners. But there is still a journey to go in Japan IR awarding process and no doubt I’ll take out my piece of paper again.

Positioning to win will be everyone’s focus now and keeping that t-shirt slogan in mind should give the candidates the extra energy they will need to finish among the winners.

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Professor Glenn McCartney

Professor Glenn McCartney

Professor Glenn McCartney MBE is an Associate Professor of International Integrated Resort Management at the University of Macau, China, where he also serves as Acting Associate Dean (Curriculum and Teaching) in the Faculty of Business Administration. He worked for many years in different operational, strategic and consultancy roles within the tourism, hospitality and gaming industry.

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