Is Kyoto’s Tourism Revenue an Illusion? Illegal Rentals, Unlicensed Taxis, and Foreign Capital Taking Profits

Kyoto is one of Japan’s most renowned tourist destinations, yet it is currently facing financial difficulties and challenges in its tourism industry. Despite the recovery of inbound tourism, local communities are not reaping the full benefits, and the burden on residents is increasing.

The Problem of Overtourism

In theory, an increase in tourists should bring significant economic benefits to local finances and residents. However, the economic benefits to the local community have not materialized. Instead, overtourism has put pressure on residents’ daily lives and has had a negative impact on the preservation of historical buildings and cultural resources.

The Value of the Kyoto Brand

To protect the value of Kyoto’s brand, it is crucial not to engage in price competition but rather to enhance the quality of tourism and provide high-value services. While preserving traditions and culture, proper rules for tourists and a priority on public safety must be established.

Illegal Rentals and Unlicensed Taxis

However, the reality is that illegal rentals and unlicensed taxis are rampant. These illicit activities are difficult to crack down on, as operators often claim they are simply “picking up a friend.” Moreover, online prepayments make it difficult to track money transactions within Japan, leaving little evidence of illegal activity.

Land Purchases by Foreign Capital

Additionally, foreign capital is increasingly purchasing land in Kyoto, posing a threat to its cultural integrity. These investments are often made for speculative purposes without consideration for cultural and local community contributions. As a result, historic buildings are being transformed into commercial facilities or speculative properties at an alarming rate.

Devaluation and Resale

Once land is used in this manner, its cultural value diminishes, negatively affecting local residents. Furthermore, when the land’s value drops, it is easily resold, creating an ongoing cycle of instability within the community.

The Legacy of Our Predecessors

To address these issues, it is essential to strengthen regulations and oversight while ensuring that tourism revenue is reinvested into local communities and the preservation of cultural properties. The tourism industry is part of the historical legacy passed down by our predecessors, and it should not be exploited for short-term financial gain.

Kyoto’s Future

Kyoto should not merely be a tourist city but should aim to establish itself as “the safest and most comfortable tourist destination in the world.” Strengthening collaboration between local law enforcement and private security firms, along with implementing surveillance systems, will be necessary to swiftly detect and respond to illegal activities.

A Dream Destination

It is also essential to redefine the nature of tourism business. Instead of focusing on short-term profits, Kyoto should prioritize sustainable development while preserving its history. Rather than creating overcrowded tourist destinations filled with buses, Kyoto should position itself as a premium travel destination that wealthy travelers worldwide aspire to visit at least once in their lifetime.

This article explores Kyoto’s financial problems, the effects of overtourism, the reality of illegal rentals and unlicensed taxis, and the issues related to land purchases by foreign capital, while discussing the necessary measures for Kyoto to become the world’s top tourism destination.

Kyoto’s Financial Crisis—Why Is a Famous Tourist City Struggling?

Kyoto is one of Japan’s leading tourist cities, attracting many visitors from both Japan and abroad. However, despite its prominence, Kyoto’s financial situation remains difficult. Although the city has been running a budget surplus in recent years, it continues to struggle with repaying accumulated debts. The financial impact of the COVID-19 pandemic caused a significant drop in revenue, and while recovery is underway, the situation remains precarious.

One major reason for this is that tourism tax revenue is not being fully utilized. Despite the resurgence of inbound tourism, the revenue generated from tourism is not being sufficiently reinvested into local communities, increasing the financial burden on residents. Additionally, inflation has driven up living costs, and while tourism revenue should ideally lead to lower local taxes, the opposite is occurring. The benefits of tourism revenue are concentrated in the hands of a few businesses rather than being equitably distributed throughout the community.

Failing to Profit from Overtourism

An increase in tourists does not necessarily translate into benefits for local communities. On the contrary, overtourism often disrupts residents’ lives and leads to the deterioration of tourism resources.

Congestion in major tourist areas limits residents’ mobility, while waste management and noise pollution have become growing concerns. Furthermore, low-cost tourism services dominate the market, preventing local businesses from reaping significant profits. Unless these issues are addressed, an increase in tourism will neither improve Kyoto’s financial situation nor enhance residents’ quality of life.

The Need to Redefine Kyoto’s Brand

Kyoto is known for its “spirit of hospitality,” but this has often been misunderstood as simply offering cheap and high-quality services. While luxury hotels and cultural experiences remain popular, excessive price competition is eroding the value of Kyoto’s tourism industry.

True “hospitality” originates from Sen no Rikyū’s concept of the tea ceremony, where people are treated equally regardless of status. It is not a mere business slogan. The misinterpretation of hospitality has led to excessive workloads and unsustainable levels of service in the tourism industry.

Tourism businesses must prioritize providing high-quality experiences at fair prices while respecting Kyoto’s history and culture. Successful models include luxury accommodations in traditional Kyoto townhouses and exclusive cultural tours. These initiatives focus on quality over quantity and serve as ideal examples of a high-value tourism model.

By redefining Kyoto’s branding and expanding high-end tourism services, Kyoto can achieve sustainable growth as a world-class travel destination.

The Reality of Illegal Rentals and Unlicensed Taxis

Illegal rentals and unlicensed taxis have become major issues in Kyoto. Many illegal accommodations operate without permits, negatively impacting residents’ living conditions. Unlicensed taxis continue to operate around major tourist attractions, causing conflicts with the legitimate taxi industry. Concerns regarding tax evasion and passenger safety further highlight the dangers of these illicit services.

If left unchecked, these issues will degrade the quality of Kyoto’s tourism industry and ultimately lower tourist satisfaction. Stronger regulations and enforcement measures are needed.

The Impact of Foreign Capital on Kyoto’s Real Estate

Kyoto’s traditional townhouses and properties around key tourist sites are increasingly being acquired by foreign investors, particularly from China. In some areas, the authentic Kyoto landscape is disappearing due to these acquisitions.

Historic properties are being converted into hotels and commercial facilities, stripping them of their cultural significance. Moreover, skyrocketing real estate prices make it difficult for Japanese residents to buy homes, forcing locals to move elsewhere. This results in tourism profits being funneled out of the local economy and into foreign markets.

To address these challenges, Japan needs stronger laws to protect traditional architecture and monitor foreign land acquisitions. Additionally, policies that support local businesses and residents in purchasing property should be established.

Kyoto as a Model for Future Tourism

Kyoto is more than just a tourist destination—it is a city that represents Japan’s rich cultural heritage. It must serve as a model for sustainable tourism.

Strict regulations should be imposed on tourists, and disruptive behavior should be penalized. Strengthening safety measures in accommodations and transportation while promoting responsible tourism education can also be effective.

Preserving Kyoto’s security should be a top priority, with stringent standards enforced on visitors. Illegally operating businesses and disruptive tourists must be dealt with firmly to establish Kyoto’s reputation as a “safe and secure” travel destination.

Furthermore, collaborations between local police, private security firms, and AI surveillance systems can ensure a safer tourism environment. Creating a city where residents can live comfortably should be a priority.

Conclusion: Kyoto Must Become the World’s Best Tourism Destination

The preservation of Japan’s cultural heritage is essential. It is our responsibility to protect and pass down the historical legacies left by our predecessors.

Kyoto’s true value lies not only in its historical architecture but also in the culture nurtured by its people. This cultural heritage cannot be replicated elsewhere. Kyoto must not become a commodity for cheap tourism but should uphold its status as a premier travel destination for generations to come.

Redefining the Tourism Business

The foundation of the tourism business must be the preservation of Kyoto’s value. The unchecked promotion of mass tourism and price-cutting that damages history must never be allowed. Companies and foreign investors that seek only profit without understanding Kyoto’s cultural heritage must be firmly regulated. To maintain Kyoto’s historical and cultural identity, it is essential to establish appropriate regulations and ensure a strong awareness of the importance of protecting the region’s value.

Kyoto should aim to establish itself as “the safest and most secure tourist destination in the world.” To achieve this, it must enhance its brand value, attract high-quality tourists, properly distribute tourism revenue to reduce the burden on local residents, and prioritize public safety. Creating a city that is comfortable for both tourists and residents is essential.

Kyoto possesses the potential to establish itself as one of the world’s premier tourist destinations by leveraging its cultural and historical value. It is crucial to protect and sustain this value without resorting to short-term gains through mass tourism. This responsibility falls upon the people of today, ensuring that Kyoto remains a city of pride for future generations.