The Journal The Authority on Global Business in Japan

Yuko Kato, a 50-year-old housewife, was raised in Kyoto and has lived there all her life. Going to the 1,300-year-old Nishiki Market, known as “Kyoto’s kitchen,” to buy fish, pickles, and seasonings used to be a weekly habit for her. But that has changed over the past five years.

These days, the traditional retail market, which covers five blocks of narrow laneways lined with shops, is overrun by foreign tourists. Many of them eat skewered shrimp and other local delicacies as they stroll, making it difficult for daily shoppers to go about their business. Posters that read “No Eating While Walking” are pasted everywhere but are largely ignored.

“Today, I’d rather go to a department store, and only come to Nishiki when I really need to,” said Kato. “Now we have so many new shops for tourists serving green-tea-flavored sweets or takoyaki [small balls of deep-fried batter filled with octopus pieces]. Kyoto’s Nishiki has disappeared.”

While the increased tourism should imply bustling business, it has been the reverse for Nishiki Daimaru, a 60-year-old fish outlet that is one of more than 100 shops in the market. Its owner says 80 percent of his customers are now foreigners. As a result, sales have declined for the past three to four years. Tourists tend to buy only small amounts of sashimi (slices of raw fish) to eat in a dining area at the back of his store, whereas, in the past, locals shopped there for their daily needs, he said. Katsumi Utsu, chief director of the market, said Nishiki is now a “crush of spectators rather than a lively scene of local shoppers.”

Kyoto’s 1,300-year-old Nishiki Market. Photo: Ken Kobayashi

The situation at the Nishiki Market—and indeed in Kyoto overall—may be a harbinger of things to come for other cities in Japan. With inbound tourism surging, the country is grappling with the government’s plan to develop the industry into a new pillar of the economy even as over-tourism threatens to burden historical sites and infrastructure.

In 2018, foreign visitor arrivals jumped 8.7 percent—to 31.19 million—from a year earlier. And, as Japan sprints toward two major sporting events—the Rugby World Cup 2019 and the 2020 Tokyo Olympic and Paralympic Games—the numbers are expected to keep rising. Goals set by Japanese Prime Minister Shinzo Abe in 2016 aim for 40 million foreign tourist arrivals in 2020 and 60 million in 2030.

Abe is also working to stimulate domestic tourism. This year’s annual Golden Week holiday ran longer than usual—a period of 10 days from April 27 to May 6. The extension was to celebrate the coronation on May 1 of Crown Prince Naruhito as emperor. Data from JTB Corporation, Japan’s leading travel agency, showed the number of residents who planned to travel domestically during the period was up 1.1 percent on the year; those with plans to travel abroad were higher by 6.9 percent.

The surge in foreign visitors to Japan reflects a gradual easing of travel visa requirements since 2013 for visitors coming from countries such as Thailand, the Philippines, and China. Growth in the number of budget airlines in Asia and a depreciation in the yen have also made Japan one of the most popular destinations in the region.

According to the United Nations World Tourism Organization, Japan was the 12th-most-visited country in 2017. It also recorded the highest growth in tourist arrivals, outpacing Vietnam, Chile, and Thailand.

“Japan has its own unique attraction for foreigners . . . especially its food and drink culture,” said Tyler Palma, an American who is Tokyo office manager for tour operator InsideJapan Tours.

“How Japanese people approach sake, for example, is very different to how British approach beer,” said Palma. “Japan is a destination for those who appreciate local culture.”

The problem of over-tourism is not restricted to Japan. Thailand, Asia’s most popular destination, welcomed more than 38 million visitors from abroad in 2018, up 7.5 percent from the previous year. Maya Bay in the Phi Phi Islands, famous as the setting for the 2000 film The Beach, starring Leonardo DiCaprio, has been off limits to tourists since June 2018 due to damage to the surrounding coral. And the Philippine resort island of Boracay closed for six months last year to deal with sewage problems.

In Japan, strain caused by the rising number of tourists is probably most visible in Kyoto, the ancient capital. Known for its beautiful shrines, temples, and elegant gardens, the city has long welcomed domestic and foreign tourists—but local tolerance levels are being tested. A 68-year-old man waiting at JR Kyoto Station, the gateway to the city, said he tries to avoid taking buses from the station because they are crowded with tourists and their large luggage. “I need to wait for one or sometimes two buses to get on,” he complained.

According to a survey by the city, 7.4 million foreign guests traveled to Kyoto in 2017, a more than fivefold increase from 2012. Including domestic tourists, the city hosted 53.6 million visitors in 2017, dwarfing its population of 1.5 million. While the total number of guests was down 3 percent from the previous year, reflecting fewer domestic travelers, “More than 70 percent of the foreigners were first-timers to Kyoto, so the crowds were concentrated in well-known temples and sites,” noted Kazuya Fukuhara, managing director of the city’s tourism office.

Joanna, a 29-year-old tourist from the UK, was astonished when she visited Fushimi Inari Shrine with her boyfriend and saw it packed with tourists taking selfies in front of its thousands of statuesque vermilion gates. “Although we wanted to go see the forest at the end of the gates, we decided not to go. We just couldn’t walk because of the crowds,” she said.

Daisaku Kadokawa, the mayor of Kyoto, insists that the overcrowding occurs “only in some limited areas,” but he agrees the city “is not designed for sightseeing, nor to be a theme park.”

Kyoto has taken measures to lessen the negative impact of guests at well-known sites such as Fushimi Inari and Arashiyama, a district famous for its towering emerald-green bamboo groves. These measures include discounted tickets for the subway to ease pressure on its bus network and publishing the volume of visitors on its website so that people can avoid peak times.

Palma of InsideJapan Tours said: “I am very sad about Kyoto. There is currently very little benefit for the locals [from tourism]. It is a city that deserves a higher quality of visitor—those who have an appreciation for local culture and custom.”

The famous bamboo groves of Arashiyama, Kyoto. Photo: Ken Kobayashi

Grassroots opposition to the rising number of tourists appears to be at odds with the government’s policy of cultivating the industry. The sector has seen sharp growth in recent years, compared with weakening competitiveness in manufacturing and other industries. Spending by foreign visitors hit a record ¥4.5 trillion ($40.1 billion) in 2018, quadruple the amount spent in 2012, according to the Japan Tourism Agency (JTA).

Data from the JTA also reveals that while more foreigners are coming to Japan, their per-capita spending has slipped for the past three years. It came in at ¥153,000 in 2018, down one percent from 2017. The government aims to raise this to ¥200,000 by 2020, a challenging but necessary goal if it is to meet its lofty target of ¥8 trillion in annual spending by foreign tourists in the same year.

The government hopes some of the money will make its way to economies outside the major urban areas, particularly those struggling with depopulation and rapidly aging communities. Japan’s native population fell at a record annual pace in 2018, and the number of people aged 70 or older reached a fifth of the population for the first time as of September 2018.

“Tourism has become a trigger for regional revitalization,” Abe said in September at a meeting of his Tourism Strategy Promotion Council. “Foreign tourists seek scenery and exp­­eriences that are unique to each area, which offers great opportunities for all regions.”

Japan needs to “monitor and manage tourism based on a clear purpose,” said Graham Miller, a professor at the UK’s University of Surrey, who also teaches at Wakayama University in Japan and specializes in sustainable tourism. “Multiple contradictions are happening when enhancing tourism. Simply bringing foreign tourists to Japan, or helping stimulate regional economies; which is the priority for the Abe administration?”

Spreading the number of tourists around might relieve some of the pressure on traditional tourist magnets such as Tokyo, Kyoto, and Mount Fuji. Video clips posted by the Japan National Tourism Organization (JNTO) on its website show Millennials enjoying hikes in the mountains, traditional arts in less-well-known museums, and meals in local eateries. Rural destinations such as the Japanese Alps of Kamikochi in Nagano Prefecture and the Sand Museum in Tottori Prefecture are promoted to “entice long-haul travelers to . . . explore the country beyond the well-known popular attractions.”

These clips are a sharp contrast to a 2012–14 campaign that emphasized temples, geisha, cherry blossoms, sumo wrestling, and other traditional images. “Japan has moved from simply chasing the number of visitors to spreading these visitors around the country,” said Takayuki Miyajima, senior eco­nomist at Mizuho Research Institute Ltd. It means they will “spend more on lodging, which should help to offset lower per-capita spending,” he said.

But even if tourists start to explore the rest of the country, it’s not clear those areas will benefit. Much depends on the logistics infrastructure in any given area, explained Yuichi Yamada, chief researcher at think tank Japan Travel Bureau Foundation.

Although a smaller city might attract a world-class hotel chain and tourists, this will not help the local economy if the hotel uses imported food, and linen and cleaning services from Tokyo or other nearby big cities. This is usually the case in remote areas because local suppliers rarely have the capacity to handle large numbers of tourists. As a result, said Yamada, “Some areas are exploited by tourism, with most of the profit flowing out of the region.”

Niseko, a well-known ski resort on the northern island of Hokkaido, may be a case in point. It and neighboring Kutchan have changed dramatically as a result of tourism. The two towns have a combined population of 20,000 and attracted 270,000 foreign tourists in 2017. Kutchan’s commercial and residential land prices were up 59 percent and 50 percent, respectively, as of January 1. Those were the two biggest gains nationwide, according to an annual survey by the Ministry of Land, Infrastructure, Transport and Tourism.

However, the condominiums in the area are typically developed by foreign investors and sold to foreigners, according to Yamada.

Niseko has long been a success story of foreign money revitalizing a regional ski resort, but “a lot of the money leaves the region” because the property is largely foreign-owned. Although some restaurants run by locals benefit from foreign skiers, “Most of the locals may think, ‘we are not receiving enough benefit,’” he added.

“Japan simply focuses on the number of visitors, like Disneyland does. But we should not forget its impact on the daily lives of the local people,” said Tomohiro Iguchi, representative director of the Snow Country Tourism Zone, which covers Niigata, Nagano, and Gunma Prefectures and attracts hundreds of thousands of visitors every year.

Some industry experts down­play the problem of over-tourism. “Locals in Kyoto and elsewhere are just being emo­tional when they complain about such pro­blems,” said David Atkinson, chief executive officer of Konishi Decorative Arts & Crafts Co. Ltd., which specializes in restoring cultural assets and national treasures. Atkinson, who is also a special adviser to the JNTO, said, “Japan does not have any time to waste to counter its depopulation crisis.” Only a decade ago, Kyoto was “a step away from decline,” but it has been revived by the jump in foreign tourists. “Infrastructure will fall into disuse as the population decreases,” he added, noting this is why it is so important to bring in tourists.

While he agrees that local authorities and companies are not taking enough initiative to solve on-the-ground issues related to tourism, Atkinson insists that, when it comes down to it, “Japanese people need to realize they are not in a position to ask too much.”

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According to the United Nations World Tourism Organization, Japan was the 12th-most-visited country in 2017.