H.I.S. eyes island off theme park for casino

by Yuki Yamaguchi

Bloomberg

H.I.S. Co.’s Dutch-themed Huis Ten Bosch amusement park along the Nagasaki coast is considering buying a deserted offshore island in an expansion to boost its appeal as a possible site for a casino resort.

“We are planning to buy new land to offer more games at the Huis Ten Bosch theme park,” Hideo Sawada, chairman of the Tokyo-based travel agency and park operator, said in an interview last week. “There are a lot of deserted islands nearby.” He said at least ¥100 billion is needed to fund a gambling resort at the park.

Huis Ten Bosch and sites across Japan are preparing to compete for possible gambling resort developments before the nation ends a ban on casinos, with preliminary legislation expected to be passed in the coming months. Global operators from Las Vegas Sands Corp. to Melco Crown Entertainment Ltd. have said they are prepared to invest billions of dollars should they win permits for casinos in the world’s third-largest economy.

Japan’s casino market could eventually generate $40 billion in annual revenue, trailing only China’s Macau as a gambling hub, CLSA Asia-Pacific Markets estimates.

Adding a casino could double sales at H.I.S., while the effect on profit would depend on how much the company invests, Sawada said. Revenue jumped to ¥480 billion, the highest level since at least 1994, in the year that ended in October and is expected to climb 12 percent to ¥536 billion this fiscal year, according to the average of seven analyst estimates compiled by Bloomberg.

H.I.S., the country’s largest listed travel agency, plans to lease land to casino developers at Huis Ten Bosch in Nagasaki Prefecture. Sawada bought the development in 2010, has returned the property to profit, partly by organizing tours incorporating the park and hotels on the premises.

The travel agency is in talks with video game makers in Japan and overseas to partner on building what Sawada calls a “Game Kingdom” at Huis Ten Bosch. He declined to name companies involved in the negotiations. The facility will offer a variety of interactive games, including a paintball-like battle simulation known as “survival games.”

H.I.S. is also in discussions with the Japan Racing Association, a government-affiliated group overseeing horse racing, to use its 1,800-seat theater near the theme park as part of the expansion to add an entertainment venue, Sawada said.

Lawmakers from the Liberal Democratic Party, Nippon Ishin no Kai (Japan Restoration Party) and other groups submitted a bill to legalize casinos to the Diet in December. Supporting lawmakers have said they will push for passage this year. A subsequent bill detailing the rules of casino operations would also need to be approved.

Nagasaki Gov. Houdou Nakamura said in March that the prefecture will try to introduce casino resorts with the Huis Ten Bosch area as a potential site.

Local governments in Japan’s biggest cities, including Tokyo, Osaka and Yokohama, have said they intend to pursue casino resort developments, as have representatives of less-populated prefectures, including Nagasaki, Miyazaki, Hokkaido and Miyagi.

Huis Ten Bosch is spread across 1.52 million sq. meters, about twice the size of Tokyo Disneyland, according to its website.

Huis Ten Bosch’s operating profit almost doubled to about ¥5 billion for the year to last October, H.I.S. said in a December statement. The business accounted for 38 percent of H.I.S. profit last fiscal year, according to data compiled by Bloomberg.

The theme park posted a net loss of ¥2.1 billion for the 12 months that ended in March 2009, a year before H.I.S. bought it.

Visitors to Huis Ten Bosch rose 29 percent to 2.48 million last fiscal year, it said.

“We will be the fastest one to build a casino, once there is a green light,” Sawada said. “No other Japanese city can turn a profit on casinos other than us, apart from Tokyo and Osaka.”