Two overseas operators interested in Hokkaido IR, but national rules raise concerns: prefectural survey

Two of three overseas integrated resort (IR) operators surveyed by Japan’s Hokkaido prefecture have expressed interest in participating in a potential casino-resort project there, according to newly released local government materials. The operators were not identified in the survey findings, which were made public on Monday as the prefectural government presented a final draft of its updated IR policy to a committee of the Hokkaido Prefectural Assembly. Two respondents said Hokkaido had the potential to host an IR, while the third selected “other”. All three overseas IR operators believed Hokkaido offered advantages as a location for a casino-resort development, according to the official survey results. Two of the three operators expressed interest in pursuing IR business in Hokkaido, while one said it was not interested, per the materials reviewed by GGRAsia’s Japan correspondent. According to the survey findings, one respondent described Hokkaido as having long been regarded as one of Japan’s most important candidate locations for an IR and said it continued to have a high level of interest in that market. Feedback from the operators highlighted Hokkaido’s natural environment, food and hot-spring culture, transport links and untapped market potential. One view was that the prefecture would be best suited to an IR positioned between a regional resort and a destination resort, serving a broad customer base rather than being primarily business-oriented. The operators cited access to an international airport, connections with the Sapporo metropolitan area and the wider Hokkaido transport network, sufficient development land, stable winter operations and community support among the key considerations for selecting a site. The feedback also pointed to possible obstacles under Japan’s existing IR framework. One operator suggested that, although Hokkaido was an attractive market, the scale of facilities required under the national rules could pose challenges to companies. Respondents also raised concerns about the five-year renewal cycle for approval of IR district development plans, saying it created uncertainty for investors and lenders. They suggested allowing phased development to reduce initial investment risk and enable facilities to be expanded in line with demand. Japan’s Act on Development of Specified Integrated Resort Districts states that the validity period for a certified IR District Development Plan is 10 years from the day it was approved by the national authorities. A renewal period of five years is possible, running from the initial expiry date. Under Japan’s casino liberalisation framework, prefectures or ordinance-level cities interested in hosting an IR are required to team up with private-sector businesses before pitching a bid to the national authorities. Local interest Separately, 12 of 13 domestic IR-related businesses surveyed by the prefectural government said Hokkaido had the potential and competitive advantages to host a casino resort, and expressed interest in taking part in IR-related business in the prefecture. Several domestic respondents said Hokkaido could differentiate itself from urban IR developments in places such as Osaka, as well as overseas destinations, by drawing on its natural environment, food, hot springs and snow resorts. Some, however, cautioned that the existing facility requirements, as set out by the national government, were excessive for a regional market. The Hokkaido government also surveyed all 179 municipalities in the prefecture. Only Tomakomai (pictured in a file photo) expressed a definite interest in hosting an IR under the existing national requirements. Hakodate indicated an interest in having an IR within the municipality but said it could not yet take a firm position on the matter. Another 71 municipalities expressed interest in an IR being developed in Hokkaido but outside their own jurisdictions, while 106 said they had no interest in such a project at this stage. Hokkaido’s updated basic stance on IR development envisages a complex that would draw on the prefecture’s nature, food and established tourism brand, while serving as a gateway for sending visitors to destinations throughout Hokkaido. Regarding scale, the document notes that current national regulations require an IR’s accommodation facilities to have an aggregate guest-room floor area of approximately 100,000 square metres (1.08 million sq. feet). It no longer gives the earlier indicative range of up to nearly 2,800 rooms, instead saying the accommodation mix and scale should be assessed based on demand from different target markets. The prefecture also proposes asking the national government to relax requirements covering accommodation and meetings, incentives, conferences and exhibitions (MICE) facilities to reflect Hokkaido’s regional market characteristics, according to the materials published on Monday. Industry experts spoken to recently by GGRAsia on the prospects for the second round of IR-site applications had mentioned the possibility that non-metropolitan areas might find it hard to support the level of facilities and investment envisaged under Japan’s IR Act – the enabling legislation. The final draft of Hokkaido’s updated IR policy does not commit the prefecture to submitting a bid during Japan’s second IR application round, scheduled to run from May 6 to November 5, 2027. Hokkaido withdrew from the first IR application process in late 2019, citing environmental concerns and the limited time available to conduct the necessary assessment. Tomakomai – an industrial port city on Hokkaido’s south-central coast – had been identified as the prefecture’s preferred candidate location at the time. The prefecture’s updated basic stance on IR development is expected to be finalised in October. The only Japanese IR approved so far is the under-construction JPY1.51-trillion (US$9.58-billion currently) MGM Osaka, being developed by MGM Resorts International with local partners, and due to open at the end of 2030.