Kyoto is facing bankruptcy. What happens now?

Japan Times -- Sep 21
KYOTO – The ancient capital of Kyoto has long been a tourist mecca, attracting domestic and international travelers to its World Heritage-designated temples, shrines and rock gardens.

From the city’s traditional geiko (geisha) quarter of Gion to Kinkakuji, the Golden Pavilion, Kyoto’s has few rival few cities anywhere in the world when it comes to cultural treasures.

For centuries, Kyoto, home of the emperor, was a forbidden city, inaccessible to the outside world. Foreign travelers passing through Japan in the 17th through the 19th centuries were not allowed to step foot in it. As late as the early 1870s, Westerners in Japan’s treaty ports such as Yokohama and Kobe were prohibited from visiting the city unless they had special permission — which was rarely granted. One report, published in a 1918 history of the opening of Kobe Port, suggested that, until an 1872 international exhibition in Kyoto, no more than a dozen Westerners had ever seen it.

In the 19th century, the idea that Kyoto would someday become one of the world’s most popular tourist destinations with a highly developed infrastructure catering to international visitors would most likely have been dismissed as a fantasy. But by 2014, international media such as Travel +Leisure magazine were calling Kyoto the world’s best city to visit (an honor the city won again a year later).

The accolades led to tourists from around the world pouring into Kyoto, putting a strain on the city’s infrastructure. New hotel chains sprang up like mushrooms, and new businesses catering to the suddenly booming tourist trade appeared almost overnight. Kimono-clad Mayor Daisaku Kadokawa played the role of cultural ambassador, popping up at international conferences to extoll Kyoto’s heritage and traditions and encouraging people to visit.

However, the good times hid a dark secret. Despite the fact Kyoto’s tourism industry was recording record profits, the city itself was going bankrupt.

In June, the municipal tourism office announced only about 450,000 foreign tourists visited in 2020 — an 88% drop compared to the 3.8 million who came in 2019. Hotel reservations for 2020 were down nearly 60% in 2020 compared to the previous year.

Then, in August, a grim-faced Kadokawa warned that Kyoto faced possible bankruptcy and drastic cuts in the city budget were needed over the next four years in order to prevent that. The restructuring plan for 2021-25 calls for trimming the bureaucracy by at least 550 people, raising the minimum age of those eligible for discount transportation services from 70 to 75, and cutting subsidies to day care workers. Kyoto has total debts of Y860 billion and faces a Y280 billion deficit by 2025.