Nightclubs May Help Drive Revenue at Asian IRs

Among the non-gaming attractions that should be considered for Japanese IRs are major nightclubs. One of the objectives of IRs, after all, is to provide 24 hour per day entertainment in Japan, and thus boost consumer spending. This movement is already afoot in other parts of Asia.

Marina Bay Sands, for example, is bringing one of the world’s top nightclub brands to Singapore next year, becoming the latest of the region’s major IRs to add clubbing to the entertainment mix in the hope of duplicating the success of Las Vegas’ vibrant night scene.

Sands is teaming with the Tao Group to open Asia’s first Marquee Club. The massive venue will span over three floors and include an eight-armed Ferris Wheel within its premises.

Melco Resorts & Entertainment opened Club Cubic in its City of Dreams resort in 2011 and brought over the world-renowned Pacha Club to its Studio City resort in 2016, while Galaxy Entertainment reopened a revamped China Rouge that same year.

Nightclubs have become an increasingly important revenue driver in Las Vegas over the past decade, since the opening of Wynn Resorts’ XS in the Encore Las Vegas in 2008. They have helped change the demographic of visitors to the US gambling hub, with 38 percent of visitation coming from millennials, according to the Las Vegas Convention and Visitors Authority.

However, whether a nightclub is a wise investment for an IR is a complicated question. John Raczka, a senior entertainment executive who introduced Pacha and Pangaea to Asia, says there are many variables needed to line up for a nightclub to be successful.

“No matter how cool the design of a club might be or its scale, it’s like making a motion picture—you will not know for sure how well it will perform, or for how long, until you open it because of that intangible component,” he said.

There are few available figures as to how well existing clubs are performing for their owners in Asia. In Macau, non-gaming revenue is rising, but at 12 percent of the total it’s still a far cry from the 65 percent level generated by Las Vegas. Analysts at Morgan Stanley said in a report earlier this year that they doubted Macau would ever generate this level of non-gaming revenue.

As for Japan, it remains unclear if any of the IR operators intend to build a major nightclub as a possible attraction. (AGB)