Melco Resorts CEO Lawrence Ho Expects Yokohama Integrated Resort Will Cost at Least $10 Billion
Posted on: December 9, 2019, 08:54h.
Last updated on: December 11, 2019, 10:35h.
Add Melco Resorts Chairman and CEO Lawrence Ho to the list of gaming executives forecasting massive price tags to build high-end integrated resorts in Japan.
Ho, leader of one of the largest gaming companies operating in Asia, recently put an 11-figure estimate on the costs for a Japanese gaming property.
Our view is that a resort in Yokohama will cost at least 10 billion US dollars and will have some of the latest technological advancements in terms of smart cities,” said Ho in a recent interview with Bloomberg.
Ho reiterated that Melco’s focus remains on Yokohama, while adding that the company’s effort to bring a gaming property to Asia’s second-largest economy has been a “15-year journey.”
Jibes With Other Estimates
The Melco executive’s forecast of at least $10 billion in costs for gaming venue in Japan isn’t surprising and jibes with some other estimates that have been floating around over the course of 2019. Earlier this year, a team of Fitch Rating analysts visited the country and came away saying that the cost floor for a top tier Japanese integrated resort is $10 billion and could drift up to $15 billion, a substantial increase from the research firm’s previous ceiling of $10 billion.
Las Vegas Sands (LVS), a rival to Melco in Macau and one of the other operators eyeing Yokohama, has previously issued Japan price tags that match or even exceed Ho’s $10 billion estimate.
On the company’s third-quarter earnings conference call in October, LVS COO Rob Goldstein said the operator could spend $10 billion to $12 billion to build a gaming property in Japan. CFO Patrick Dumont added that those figures could actually prove to be on the low end.
Still, it’s easy to see why companies want in on the action in Japan: the country’s gaming market could be worth $15 billion by 2025, according to some Wall Street projections.
2020 is really going to be the year when the integrated resort moves forward (in Japan),” said Ho in the Bloomberg interview. “I’m in Japan every week now. So we’re really getting ramped up for next year.”
It’s expected that Japan’s government won’t begin fielding proposals from prefectures and cities that want casinos until early 2021. The initial round of gaming permit awards will grant three licenses.
Even if an operator can contain Japan costs to $10 billion, that price tag would be whopping relative to figures previously spent on some of the world’s most plush gaming properties.
Adjusted for inflation, the costs for the Cosmopolitan, Wynn Las Vegas, and Bellagio, three of the Strip’s glitziest venues, combine for $9.74 billion.
Adding further context to a $10 billion Japan spend, that sum would be nearly five times the $2.10 billion Melco shelled out on the City of Dreams in Macau.
If LVS can cap its Japan effort at $10 billion, that would be nearly double the $5.36 billion spent on the Marina Bay Sands in Singapore, a venue serving as inspiration for the company’s plans in the Land of the Rising Sun.
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