May 23, 2019
General Optimism in the Asian Markets and Renewed Focus on Diversification

On the heels of a busy couple of weeks in Asia, The Innovation Group (TIG) team has identified common themes and compiled key insights from the conversations, meetings and sessions they participated in at Japan Gaming Congress and G2E Asia 2019:

Industry Momentum
  • Industry enthusiasm in Japan continues in earnest despite a continued lack of clarity around the exact process and timing for bringing the implementation law to life (highlighted by news overnight that the Abe government is pulling back from
    the  planned July 1 establishment of the Casino Management Board and delivery of IR  bidding regulations).
  • Japanese governments in the larger metropolitan regions as well as those in the outer markets continue to make the case for their regions as casino  host communities, with some progressing at notably faster rates than others. Meanwhile, there is an apparent lull in selecting local partner companies either because such partnerships are already established, or the sense of urgency to seal structural relationships has diminished.
  • Industry stakeholders remains confident about the market fundamentals and conditions for robust growth in Southeast Asia, despite acknowledgement that additional projects and properties may dilute capital returns to some extent.
  • Regional IRs across Asia have become increasingly competitive with quality facilities, higher levels of service and improved access. Tax regimes and low labor costs are providing additional competitive advantages. For more detail, read Michael Zhu's take on the burgeoning Philippine market here.
A Focus on Diversification and Local Priorities   
  • In Japan, operators are heavily promoting their ability to deliver on "Japanese-style" integrated resorts, demonstrating their sensitivity to local concerns about gaming expansion.
  • Similarly, the gaming concession retendering process in Macau is expected to focus on stability and diversification. Stability will include preserving Macau's social and public security gains since the liberation of gaming in the city, while increased diversification -- between gaming and beyond gaming, between Macau and beyond Macau, and between VIP and the mass market (as we detailed in this piece) -- is required to further ensure that stability. Macau also is expected to prioritize tourism management, its own branding power and the overall quality of Macau's signature experience.
For more information, please contact:

Michael Soll
President
The Innovation Group
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Michael Zhu
Senior Vice President,
Intl. Operations Planning & Analysis
The Innovation Group

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