MGM’s Osaka Integrated Resort May Get Another Setback

Local media outlets in Japan have seen documents from the Bureau International des Exposition (BIE), which oversees the upcoming Expo 2025 or World Fair, as the gathering is colloquially known, which ask for the construction of the integrated resort to be put on pause for six months.

Work on MGM Osaka May Halt Because of the World Fair

This, though, has serious implications for the possible timetable. For one, the project’s price will most likely suffer another hike, pushing it beyond the $9.1bn price tag that MGM Resorts International and its local partner have been so far prepared to foot.

Nevertheless, the latest contretemps adds to a list of difficulties that could impinge on financial results and stretch the window for recouping the investment. MGM Resorts International is nevertheless in a very strong position, gaining access to the first integrated resort in the country, and preparing to reap the benefits thereof.

Other projects will not be arriving any time soon, either, as the lengthy regulatory process and construction work involved, along with upfront capital, pose gargantuan challenges all on their own. Japanese NIMBYs have not helped either.

MGM Resorts International originally hoped, although being tight-lipped, that the integrated resort could arrive in time for the Expo 2025, which would have coincided with a massive influx of tourists, but this target was plagued by delays, a global economic cool down, geopolitical crises, and a deadly pandemic.

Outwardly, MGM Resorts International is projecting strength. Company CEO and president Bill Hornbuckle said during the company’s recent Q2 earnings call that things in Japan were “moving along nicely,”  and reaffirmed that the project is looking to launch at some point in 2030, possibly a year later or earlier.

However, his comments were made prior to the reports that the BIE may be looking for a hiatus in the construction, probably to ensure that the World Fair is not going against a din and racket of construction work in the backdrop. Such a delay would create some interesting opportunities.

In the meantime, a fee was discussed previously to help improve local infrastructure and reduce wear and tear on that same infrastructure that more tourist footfall will inevitably bring along.

Thailand Could Use Opening to Consolidate Its Own Incoming IRs

For example, Thailand is looking to also build a rival project in the region, which will be a competitor to the Osaka integrated resort. Having first dibs could translate into an early-day momentum and put MGM Resorts International in a position of second fiddle for a while.

Of course, such short-term success need not determine the broader outlook for the region, as Thailand and Japan will be tied for customers, but they will find ways to appeal to enough visitors to sustain the integrated resort business model.

A six-month delay on construction, however, could indeed sour Hornbuckle’s mood as he was under the impression that things were advancing well – all but for a newly cropped up delay it seems.