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Friday, March 2, 2007

WHEN A CITY GOES BUST

Once Tokyo's spa playground, Atami fading fast


Staff writer

ATAMI, Shizuoka Pref. -- Tamae "Meme" Ono remembers fondly the late 1980s when the hot spring resort of Atami was a glamorous place to be.

Hotels and condos line the beach in Atami, Shizuoka Prefecture
Hotels and condos line the beach in Atami, Shizuoka Prefecture. The city, once a package tour and honeymoon hub, is in financial crisis as the tourism industry fades. JUN HONGO PHOTOS

"Things were electrifying back in those days. We used to have many customers spend fortunes on geisha -- sometimes one person paid for 10 geisha," the 54-year-old manager of a geisha house said.

Ono, who left her home in Osaka at 15 to become a geisha in Atami, witnessed the once-glitzy city's fall when the economic bubble burst and people began to look elsewhere to spend their holidays.

Only 45 minutes from Tokyo by shinkansen, Atami prospered during the postwar economic growth by attracting honeymooners and group tours, often corporate.

Hotels were constructed along the Pacific coast for the large number of visitors who would spend a night or two at the hot springs resorts. Lavish dinners attended by geisha were one of the attractions.

Atami had approximately 15 million tourists in 1988. Now the figure is half. Now there are only about 250 local geisha, a quarter of the peak time, Ono said.

After the collapse of the bubble economy in the 1990s, the historic, landmark hotels shut down one after the other, leaving an image of a broken city with decayed malls, empty streets and a seedy sex district.

When Mayor Sakae Saito announced Dec. 5 that Atami was in a financial crisis, the city took on the dubious honor of being a strong contender to be the next municipality to go bankrupt after Yubari, Hokkaido, which went bust last June.

In his statement, Saito said Atami would "plunge and be designated for financial reconstruction in the very near future" if the city remained on its present course.

"Atami is facing a crisis," he said.

Atami had appeared financially healthy for the past decade. In fiscal 2005, the city had a surplus of approximately 400 million yen.

But the city had been cov ering up the fact that it was bleeding money, just as in Yubari, where officials disguised debts by taking out temporary short-term loans.

Atami Mayor Sakae Saito says he can revive the moribund hot spring resort in five years
Atami Mayor Sakae Saito says he can revive the moribund hot spring resort in five years. But many shops remain shuttered on a street near City Hall.
Many shops remain shuttered on a street near Atami's City Hall

Saito revealed in his Dec. 5 statement that Atami was losing money, but had been using a savings fund to cover the losses. The mayor revealed that the fund, which peaked at 13.2 billion yen in 1995, was nearly empty.

Facing cuts in state budgetary allocations and growing expense to cover social security costs, the 43-year-old mayor calculated that by 2011, Atami would be in debt to the tune of 6.1 billion yen and the city would be in the red in fiscal 2006, which ends at the end of this month.

The mayor's statement was met with charges by the tourist bureau, service-industry organizations and even members of the municipal assembly that the statement would only further damage the city's reputation.

"But I have no regrets and I wouldn't have made the announcement if I wasn't confident of repairing the situation," the mayor said in a recent interview with The Japan Times.

"I couldn't waste even a second in getting the word out, so each citizen can understand the gravity of the situation."

Saito claimed that when he first heard that Yubari was bankrupt, he became determined to save Atami from the same fate.

Fearing that if Atami is designated as requiring financial reconstruction, leading the central government to take over management of the city, Saito, who took office last September, came up with a recovery plan of cost-cutting, including reducing staff.

"I have no intention of doing anything fancy with City Hall," the mayor said, even though the 50-year-old building is crumbling.

"Unless something becomes dangerous, repairs to City Hall will be kept to a minimum."

The key to revitalizing Atami's economy lies in a renaissance as a tourist draw, and the mayor thinks the city can bring visitors back.

There was a time when visitors wanted to visit Atami, "and the city just sat back and depended on that," Saito said.

Since then, he said, the city hasn't tried to bring people back.

"We haven't made any effort, such as analyzing the statistics of the visitors or providing adequate information for tourists at train stations," Saito said.

Aspiring to turn Atami from a drab hot-spring town into a healthy resort city, the mayor has set up a team that reports directly to him to publicize the more than 70 annual events in the city.

He also plans to establish a hot-spring research facility and bring international conventions to the area.

Construction of a walking path for visitors to take in the city's tourist spots is also being discussed.

"I really believe that people, including the residents of Atami, underrate the beauty of the city," Saito said.

Naoki Mori, president of Otsuki Hotel Management Co., agrees that Atami is an attractive resort.

"Despite the frail economy, over 7.5 million tourists still travel here every year and 3.1 million stay for more than a night," Mori said. "To be able to have the population of Tokyo as a market is very significant."

Mori, who has restructured financially troubled hotels and inns in several prefectures -- including Oita, home of the famed Beppu resort -- opened Micuras Hotel in Atami on Jan. 20.

The hotel's spa services, including aromatherapy and "antiaging cuisine," were unique for the old spa town and it was an instant hit.

Micuras initially targeted women between the ages of 30 and 60, but once the hotel opened its doors, it found it had a wide range of customers. The 62-room inn is nearly always booked up.

"An office worker in Tokyo can hop on a train Friday after work and arrive in Atami for dinner and enjoy our service," he said. "It's even possible for one to spend three nights in the city and head to work in Tokyo on Monday morning."

Some entrepreneurs see the declining economy as an opportunity for a full-scale overhaul.

Hotel owners and other businesspeople in the area want to build a 4.3 billion yen casino in a 45-meter-high pyramid on the shore, saying it could attract 6 million additional tourists to the area.

Gambling is currently prohibited, but some politicians, including Tokyo Gov. Shintaro Ishihara, want to have specially licensed zones for casinos.

Saito's predecessor, Ichio Kawaguchi, had seen gambling as a way for the city to become prosperous again, but Saito has not decided whether to back the idea.

Some of Atami's citizens are skeptical about building more in the city.

Koichiro Ichiki, 28, a Tokyo-based business consultant from Atami, said that by 2000, his hometown was ruined.

"I seldom see young people on the streets of Atami and I don't know many Atami natives who choose to stay and work in the city," said Ichiki, who divides his time between Tokyo and Atami.

Atami's population peaked in 1967 with 54,000 residents. There are now about 40,000 in the city, but with the shrinking economy and few jobs, the municipal government expects that number to drop to 27,000 by 2030.

Ichiki said casinos and new spas might revive Atami temporarily. But to make the city healthy again, the government must put a higher priority on spending more on education and welfare, and improving the environment, he said.

Kazuo Hara, 70, spokesman for a group of about 20 Atami residents opposing construction of the pyramid casino, agreed.

Hara's group said inviting casinos to Atami would only benefit those involved and was a risky endeavor that would hurt the residents most if the project failed.

"It's not the hotel owners or tourists who will be responsible if the casino project fails," Hara said. "Just look at the citizens in Yubari and the burden they were handed."

It would difficult for a city the size of Atami to manage the risky business of gaming for very long, yet there are people who still think that by spending a lot on attractions, the city can return to its glory days, he said.

"Atami is the epitome of the rise and fall of the bubble economy," Hara said. "It's sad that the city hasn't awaken from the delusion (that it has had) its heyday."

For the first story in this two-part series
Yubari tries downsizing to solve fiscal crisis



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