Company history

Toshimitsu Tsurumatsu incorporated the Odawara Express Railway in May 1923 with capital of ¥13.5 million, and the Great Kanto Earthquake struck the construction plan almost at once. He built anyway. In April 1927 the whole 82.5 kilometres from Shinjuku to Odawara opened in a single stroke — the longest electric railway in Japan at the time. The scheme was possible because Toshimitsu already controlled a hydroelectric company founded in 1910 and conceived the railway partly as a large consumer of its surplus power; his prospectus argued that traffic between Tokyo and the Hakone side was growing faster than the state railway could absorb. An Enoshima branch to the Shonan coast followed in 1929, completing a design that aimed at excursion traffic and Tokyo commuting at the same time.

The trouble was that most of the route ran through undeveloped country. In June 1926 Diamond observed that beyond Noborito the line passed “mostly uninhabited moorland,” and set against it the twenty years Hankyu had needed to reach a 12% dividend. In April 1929 the Yomiuri Shimbun reported that the Enoshima Line had raised the capital base without raising revenue, pushing the company into difficulty; a 5% dividend was being scraped together out of land revaluation gains. Applications for further state subsidy, and a planned 20% fare rise abandoned in the face of public anger, mark how far short of the founding vision demand fell.

What rescued the finances was, ironically, war. Diamond reported in May 1939 that fare revenue had risen 33.3% year on year, principally because military facilities had arrived near Zama. In 1940 the company absorbed the operator of the Inokashira Line, and in 1941 a merger with its hydroelectric parent gave it the name Odakyu Electric Railway. It kept that name barely a year: in May 1942, under wartime transport consolidation, Odakyu was absorbed into Tokyu, joined in 1944 by Keio, so that the whole private-railway network west of Tokyo sat inside one company. The name vanished from the map nineteen years after the company was founded, and stayed gone for six more. Tokyu could not fund the rebuilding of the bombed ex-Odakyu lines, and former Odakyu staff pressed for separation; on 1 June 1948 Odakyu Electric Railway was re-established with ¥100 million of capital as a legally new company. Within a year it had bought into the Hakone Tozan Railway and the Kanagawa bus network, listed on the Tokyo Stock Exchange in May 1949, and begun assembling the taxi, sightseeing-boat and resort holdings that became the postwar group.

The line changed character in the late 1950s. “Until now we have done well on our distinctiveness as a tourist line,” Diamond wrote in June 1958, “but from here the weight of commuting will steadily grow.” The same article named the structural problem that would shape everything after it: season-ticket fares were held, as a matter of social policy, at levels that ignored the economics of a private company. The more commuters Odakyu carried, the more below-cost traffic it owned. Suburbia was arriving regardless — by 1958 the Yomiuri was describing the area around Seijo Gakuen as an upmarket residential district.

Since the railway could not price its way out, it built businesses beside the railway instead. Odakyu Department Store was founded in June 1961 and opened at Shinjuku in November 1962; Odakyu Real Estate followed in December 1964 to sell housing plots along the line; a car park and underground shopping arcade at Shinjuku’s west exit came in 1966 and the west-exit station building in 1967. Looking back in 1964, president Ando Naroku put the company’s slow start down to running “along the back roads of Kanagawa,” and credited wartime military facilities with starting the housing growth that finally opened the corridor up. Non-commuter revenue from the terminal and the trackside was what covered fares priced below cost.

The commuter railway then demanded capital on a scale the company could not generate. Morning crowding passed 250%, and in December 1964 a city planning decision authorised grade separation and quadruple tracking from Yoyogi-Uehara to Kitami. In the same month Tokyo announced a new town for 300,000 people in Tama, premised on Keio, Odakyu and Seibu building into it. Ando calculated in 1965 that a 9.4 km branch would take total spending to roughly $63.9M (¥23bn) — far beyond retained earnings, and therefore dependent on borrowings and bonds. A Yomiuri editorial in April 1971 attacked the railways for still not having started work while they bargained for cheap land, long-term low-interest loans and premium fares. The Tama Line finally opened in 1974 and reached Tama Center in 1975.

By 1981, ten years in, Tama New Town held some 18,000 dwellings and the press was calling it Tokyo’s largest dormitory suburb — precisely the traffic the 1964 plan had anticipated, and precisely the traffic the two-track railway could not carry. Retail kept pace with the housing: station buildings at Machida in 1976, at Shinjuku’s south exit in 1984, a shopping centre at Shin-Yurigaoka in 1992, a station building at Sagamihara-Ono in 1996. Work on the tracks themselves moved far more slowly. The first quadruple section, a little over two kilometres between Kitami and Izumi-Tamagawa, was completed in June 1997 — thirty-three years after the plan was approved. Group revenue that year was about ¥584.4 billion and ordinary profit ¥21.1 billion, against interest-bearing debt that had climbed into the high hundreds of billions.

The remaining sections were harder. Six kilometres from Setagaya-Daita to Kitami followed in 2004, and in March 2013 the stretch from Higashi-Kitazawa to Setagaya-Daita went underground, driven by shield tunnelling beneath the shopping streets and housing of Shimokitazawa — negotiation, as much as engineering, set the schedule. Through all of it the non-railway businesses carried the balance sheet: in the year to March 2007, transport contributed ¥163.8 billion of revenue and ¥26.3 billion of operating profit, while retail and property absorbed the financing burden of the works. The excursion railway of 1927 had become a group whose diversified earnings existed, in large part, to fund a single piece of track.

The last section was completed in March 2018, under Hoshino Koji, president since 2017. Some twelve kilometres from Yoyogi-Uehara to Noborito now run on four tracks; peak-hour services rose from 27 to 36 an hour, and the fastest Machida-to-Shinjuku journey fell from 49 minutes to 37. It had taken fifty-four years from the planning decision, about thirty years of construction, and roughly $2.8B (¥310bn) — the largest railway investment in the company’s history. The year that followed showed the payoff: the Enoshima Electric Railway was taken wholly in-house by share exchange in 2019, and in the year to March 2019 the group earned about ¥526.6 billion of revenue and ¥49.7 billion of ordinary profit, close to a record. The question the completion raised was what to build on top of the finished railway.

The pandemic hit a company that had just finished spending on rail. Passenger and hotel revenue collapsed, and the year to March 2021 produced an ordinary loss of ¥31.2 billion and a net loss of ¥39.8 billion — the first loss in Odakyu’s history, and a plain reading of how much the group still leaned on the railway.

The response was to rotate assets rather than simply cut. Odakyu sold ageing property at the Shinjuku west exit — among it the Hyatt Regency Tokyo, open since 1980 and badly hit by the collapse in occupancy — and put the proceeds into a redevelopment of the terminal itself: a 48-storey, roughly 260-metre complex costing on the order of ¥130 billion, due for completion in FY2029. Having only just finished a half-century investment in track, the company could start another large one because it had reorganised what it owned first.

The other bet was Hakone, where Odakyu has held the core tourism assets since 1949. In April 2024 it reorganised the Odakyu Hakone group to put the sightseeing business under a single company, and from FY2025 began an investment programme of roughly ¥15 billion to renew the area, aimed squarely at inbound demand. A railway that was conceived in 1923 to carry Tokyoites to Hakone is, a century on, investing in the destination rather than the line.