Galaxy Entertainment Group: how can Japan be competitive in Asian gaming and leisure market? Focus on quality, not price
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Galaxy Entertainment Group: how can Japan be competitive in Asian gaming and leisure market? Focus on quality, not price

According to casino and resort giant Galaxy Entertainment Group, a major player in Macau and one of the shortlisted companies that will be going into Japan when new laws make gaming possible there, the Japanese market will have to have a particular focus if it wants to be competitive in Asian gaming and leisure: quality. The reason for that is simple: Asia is becoming increasingly crowded, and the low-end of the market is already swamped, and Japan’s regulations are tight!

Weakness in Macau hit gaming stocks hard in May: Galaxy is still up by 3% year to date

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Source: Yahoo Finance

To get over the hurdles posed by tight regulations and low-cost competitors over the water, players in the Japanese space will have to focus on “a higher class of customer” according to Ted Chan, Galaxy’s chief operating officer for Japan Development. He was speaking at the 1stJapan IR Expo, where he told listeners:

“With strong regional competition, high taxation and entry fees for locals, operating under such a strong regulatory framework means it will be essential for us to focus on quality not price. That’s good for Japan because it is something Galaxy and our partners, Monaco SBM, do very well. The Japan opportunity is not solely mass market but affluent middle class who are higher spending and more sophisticated in their tastes. We call them premium mass travellers – the same tourists that are driving the success of Galaxy Entertainment Group, and of Macau and Singapore.”

With the Request for Concept process (by which selected operators can put forth ideas for their resorts) moving ahead, the Japanese gaming market is moving ever closer to realisation. Chan said: “We look forward to the announcement of the full regulatory framework that will precede the full RFP process in the next year.”

Disclosure
Dominion holds Galaxy Entertainment Group in its Global Trends Luxury Fund. Share price as-at 20 May 2019.


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