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Ed Tracy is the CEO of Hard Rock Japan, a subsidiary of hotel, casino, and café chain giant Hard Rock International created to support the company’s bid to operate an Integrated Resort in Japan.
Mr. Tracy has years of experience in the gaming and hospitality industries in the Asia-Pacific region and extensive knowledge of the Integrated Resort concept. Previously, he was at the helm of Sands China, the Asian division of Las Vegas Sands and one of the world’s largest casino companies by revenue.
With the Japanese government working on the second piece of legislation of a two-phase gaming and Integrated Resort legalization process, Mr. Tracy agreed to answer our questions about Hard Rock’s plans in Japan.
What are Hard Rock’s preferred locations for an Integrated Resort? How is the IR concept received by Japan’s residents? And in what way will the company’s bid to operate an IR in Japan differ from that of its competitors? Mr. Tracy provided detailed answers to these and many more questions.
How will Integrated Resorts improve Japan’s tourism product? What are the niches the country needs to fill in order to present an even more attractive product to international visitors?
The Integrated Resort initiative that the Japanese Government envisions is a “gateway to Japan.” At Hard Rock, we plan to create a world-class resort with numerous amenities for both Japanese and international visitors, including many Japanese-inspired activities, which will create the desire to visit other areas of the country. The high-tech Japan Gateway attraction with Japanese-inspired activities will allow both domestic and foreign visitors to “experience” many places in Japan and will allow them to make reservations and put together tour packages on location for concurrent or subsequent trips to the country. As such, we hope to build a large base of returning travelers to Japan.
Japan is known for its excellent international cuisine, and we plan to include several globally-known dining experiences for the well-travelled foodie. In addition to the local fare Japan is known for, Hard Rock will offer European and other Asian cuisines, and potentially fusion specialties. Hard Rock has partnered with Paco Roncero, Michelin star chef, who created the world’s most immersive, and expensive, dining experience in the world at Hard Rock Hotel Ibiza and we plan to bring experiences like that to this integrated resort.
Meetings, Incentives, Conventions & Exhibitions (MICE) events will also be a large focus for the proposed IR and visitorship to Japan. Group travel for business and leisure alike has been a mainstay and catalyst to the phenomenal growth of the tourist industry, and Hard Rock is dedicated to creating a resort that will cater to the diverse needs of today’s traveler – from the business executive to the multigenerational family. Not only can Hard Rock provide a first-class meeting experience, but we can also bring unmatched entertainment for which the brand is known with more than 30,000 live events each year at our venues. With that in mind, we look forward to bringing top tier entertainers to the property year-round.
How is the ‘Integrated Resort’ concept received in Japan? Do people have enough understanding of what it actually involves?
We’ve made a lot of progress in the market to educate the Japanese people, but much still needs to be done. For example, there seems to be a miscommunication that an Integrated Resort is nothing more than a destination casino, and we disagree. While the casino may be a part of the IR concept, it is only a small part.
The larger, more important, aspect of a unique Japanese IR is how we can bring unparalleled experiences to the visitors and international experiences for the Japanese customer. We also want it to be a multi-generational experience. Whether it’s a young couple with children, or a seasoned international traveler, we want to provide an oasis, allowing travelers the ability to relax, try new things and new cultures, and most of all receive the VIP Hard Rock treatment.
The Japanese government has said that the country’s casino legislation (currently in the works) would, to an extent, be modeled after that of Singapore. Do you think that what has worked for Singapore would work equally well for Japan and its tourism and gaming industries?
The Singapore gaming legislation is widely acknowledged as the gold standard in the gaming industry in Asia which is a blend between the gaming regulations in the U.S. and Australia; hence, it combines the high compliance and due diligence standards of the former with the stringent responsible gaming code of the latter.
While the general premises of the Singapore legislation are applicable to Japan, there are nuances which will be unique to Japan to fit its socio-political climate. In addition, delays in passing the legislation has given the Japanese government good hindsight in observing the gaps seen in the legislation in not just Macau and the Philippines, but also in Singapore.
What are your own predictions about the future of Japan’s casino market?
The only way is up. With the incredible assets in the breadth of tourist attractions and experience of Japan, the large middle-class population with a good amount of disposal income, the vicinity to China, what else is there left to say? Even with entry restrictions to local residents and junket restrictions, we anticipate an excellent growth market. When IRs come online in Japan, it will foster competitiveness and reinvestment, contributing to renewal of the IR products to sustain long term growth and market stability.
The Japan IR market may be the one that bridges the gaming industry in the region closer to the more wholesome entertainment-style model of the U.S. and reshape the mindset of casinos more towards a popular culture form of entertainment as opposed to gambling.
What will Hard Rock focus on to differentiate itself from its competitors in the race for the right to operate an Integrated Resort in Japan?
Hard Rock is a world-class entertainment company, and innately different than any of our competitors. Music is our differentiator and it runs through everything we do as a company – whether that be our more than 35,000 live events each year or our ongoing collaborations with worldwide artists. The brand is in 75 countries with 180 café, 25 hotels and 11 casinos and reaches more than 112 million guests annually.
Each Hard Rock location is regionally curated to pull in the local flare, while providing the first-class service that guests have come to expect. From a hotel perspective, Hard Rock offers popular music infused amenities, such as The Sound of Your Stay in-room music program, Rhythm & Motion spa treatments at the Rock Spa and the latest brand program – Rock Om – an in-room yoga program. All of the brand programs can be experienced at Hard Rock properties around the world.
The Hard Rock Integrated Resort will be an enigmatic product with all of the above that our peer competitors have been promising, but also none of the above in its literal sense. Yes, we will have world-class health and wellness haven, cultural experiences for the savvy world traveler, world gastronomical immersions, and more. However, we are cognitive of the habituation effect of the multitude of Integrated Resorts in Asia in recent years and will invest considerable plans to avoid emulating what’s already out there.
We are excited to bring these offerings to an Integrated Resort in Japan for fans of the brand and future fans to enjoy.
What are the main groups of tourists Hard Rock would target, if it wins the right to open an Integrated Resort in Japan?
Hard Rock’s motto is Love All. Serve All. and our product reflects that, as it is all-inclusive, appealing to every creed, race and age. Having said that, we take pride to having evolved our hospitality business to almost a science in customer segmentation. We have extensive modeling processes which aligns and match the locale, is relative strengths and weakness, the available market and its demographics. We leverage big data to identify our yield models and then design and program the attractions and amenities of the Integrated Resort to maximize the business.
Our initial analysis clearly tells us that foreign and local tourists both contribute equivalent weight and while we adhere to our 8 to 80 adage, we see the older adults local segment as an important demographic. Like our peers, we understand the importance of the growing and high-speeding Chinese outbound tourists but are also mindful not to be over reliant on them.
Most importantly, as the only major operator who is privately-owned and not publicly listed, Hard Rock is strongly committed to impact investment to contribute to the social wellness of the people in the host country, and not merely focused on profitability and shareholder value.
What are your preferred Japanese locations for an Integrated Resort?
While we hope to come a winner in any area in Japan, we believe Tomakomai City in Hokkaido is an excellent venue and area for such a world-class Hard Rock IR.
Hokkaido is conveniently located to both US, European, and Asian customers and has a year-round climate that will be appealing to the IR visitor. The excellent site with close vicinity to a world-class international airport, a well-planned long term urban development vision, all amidst a spectacular seasonal climate of bright summer colors and white wonderland in winter give us hope that Tomakomai City is the place for us.
With that being said, the government of Japan will ultimately decide where IRs are located and therefore we remain flexible.
Japan has the ability to become one of the world’s most sought-out destinations – from the upcoming 2020 Olympics in Tokyo to the potential 2025 World Expo in Osaka, there are many international events already coming to Japan that will elevate Japan’s standing as an international travel destination.
Has Hard Rock approached or been approached by local governments and potential local partners in relation to the company’s interest to enter Japan?
If you look at any of our other Hard Rock locations around the world, you will see that our philosophy and business model is focused on bringing a unique local experience to the customer. As such, in all of our projects, we work with local governments and partners to get the local experience right. This is not something we take lightly – it is an integral element of the Hard Rock experience.
Of all the foreign operators expressing interest in Japan, we are the only ones who have conducted business in the country – for 35 years to be exact with our café presence. Those decades of experience allow us to better understand the Japanese culture, and what will work and may not work.
We believe that a Hard Rock IR can be an excellent anchor and destination to allow surrounding communities and businesses to flourish and succeed in the area.
Japanese residents seem to be divided on the recent legalization of casino gambling. What is Hard Rock planning to do to address the concerns voiced over the impact of casinos on problem gambling rates?
Much has been done to educate the Japanese and there is still more to be done to continue to inform the public on this important issue. Critically, we own the unique distinction of being the only U.S. gaming company that ever had an executive sit on the board of the National Council of Problem Gambling. That alone is a clear demonstration of our strong pedigree in responsible gambling.
The Hard Rock brand has been present in the Japanese market for decades through its café locations. Do you think that this would help the company “break the ice” with that portion of the Japanese population that has its doubts about casino gaming?
Yes, we are no stranger to the Japanese market. Having been in the country the last few decades, it helps with our visibility, as well as brand awareness. Many Japanese people have come to Hard Rock Cafe and they know the product we deliver. Additionally, Hard Rock has more than 11 IRs around the world. We have learned from working in different countries, cultures and government regulatory structures. Simply put, we know how to bring a world-class destination to Japan.
How would you describe the casino gambling landscape in the Asia-Pacific region? What are the main drivers of growth within the industry? In your opinion, what should operators focus on to secure a long-term growth in the region?
Let me provide an answer here by rephrasing your question to fit the context of Hard Rock’s own vision. Your question is actually accurate in that the Asia-Pacific market today is a “casino gambling” landscape. In that respect, it will always thrive as long as there is demand in the market. The growth factor is driven by burgeoning mainland Chinese affluence and that is a spigot; the rate therefore is dictated by the Chinese government and their decision is driven by myriad of factors, socio-economic and geo-political.
If I rephrase the question to Integrated Resort landscape instead of casino gambling, then the horizon holds a completely different outlook in our eyes. There is a long-term growth opportunity for a more Western-styled Integrated Resort product in the region. Where casinos are positioned as a form of entertainment rather than a gambling product, it may not yield Macau-esque turnover, but it is a model that is more socially responsible and also more sustainable in the long term. For Hard Rock, we continue to deliver a product with that attitude and new experiences that makes customers want to come and come again.
The post Exclusive Interview with Hard Rock Japan CEO Ed Tracy on Japan IR/Casino Bid appeared first on Casino News Daily.
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