Hard Rock prepares to invest in Japan's casino industry

Tokyo

Last week, we reported that, with Japanese lawmakers considering the legalization of gambling in the country, MGM Resorts is ready to invest most $10 billion into a Japanese casino via a publicly traded real estate investment trust.

They may have some competition. Hard Rock Cafe International is reportedly getting ready to make a “major investment” in Japan’s hospitality scene as well. 

The U.S.-based chain is looking for partners to jointly bid for a license in anticipation that the legislature will approve gaming resorts, CEO Hamish Dodds told Bloomberg. “We can either play a lead role or a partnership role,” Dodds said in an interview in Tokyo. “We really hope that we can collaborate with Japanese partners and institutions.”

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Hard Rock in Asia

Hard Rock is already expanding in Asia with hotels and restaurants, said it gets more than half of its $4.5 billion revenue from its gaming business—making casino in Japan a valuable asset.

In March, Hard Rock International executives announced plans to open the Hard Rock Hotel Dalian in northeast China in 2018. The company is expanding its hotel operations into first-tier cities, such as Beijing and Shanghai, as well as second-tier cities, including Dalian and Wuhan. In September, Hard Rock announced plans for the Hard Rock Hotel Desaru Coast in the southeastern region of Malaysia. The 365-room hotel, the brand's second in Malaysia after the Penang property, is expected to open in fall 2017.

In the next five years, Hard Rock plans to grow its Asia portfolio significantly, reaching 53 cafes and quadrupling its hotels from 5 to 20. The company already has a casino hotel in Macau, and suggested opening one in Japan back in March. 

At the time, Daniel Cheng, Hard Rock SVP of business development, said that “Japan is the next Macau.” 

Bigger than Macau?

Eight months later, the enthusiasm has only grown. Aaron Fischer, an analyst at CLSA Ltd., told Bloomberg that casino revenue in Japan could range from $10 billion to $40 billion, with the potential to be “bigger than Macau,” depending on the number of integrated resorts. Macau’s casino industry generated about $30 billion last year.

Dodds said that a record tourism boom to Japan is helping fuel renewed interest in casinos, and that domestic demand could also help sway the lawmakers’ decisions. He expects the Japanese casino market could be more than $10 billion.

Last week, executives of MGM Resorts, Las Vegas Sands Wynn Resorts, Hard Rock and other gaming companies gathered in Tokyo at an integrated resorts and gaming conference to pitch local companies and politicians on their plans if gaming is approved.

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