Company history

Keio Electric Tramway was incorporated in September 1910 with capital of ¥1.25 million and an ambition it could not yet afford: an electric railway from Shinjuku out to Hachioji. A trunk railway meant heavy licensing and heavy money, so the company opened instead as a streetcar under the Tramway Ordinance, which the Tokyo prefectural government would approve. Trams began running the twelve kilometres from Sasazuka to Chofu in April 1913, with buses put on at the same time between Shinjuku and Sasazuka and between Chofu and Kokubunji — a deliberate attempt to lay down an area network where rail demand alone was still thin. Even the city-side terminus fell short of Shinjuku station, stopping at Oiwake. Short of construction money, Keio moved into the Morimura financial group’s lending orbit and in 1914 brought in Inoue Tokutaro of Fuji Gas Spinning as managing director.

The line that made Keio a real suburban railway was not built but bought. An affiliate, Gyokunan Electric Railway, had already opened the stretch from Fuchu to Higashi-Hachioji in 1925; Keio merged it in 1926 and began through service from Shinjuku to Higashi-Hachioji in May 1928. The backbone of today’s Keio Line came from a merger, not from extending track of its own.

The other half of today’s company was also assembled elsewhere. Teito Electric Railway opened from Shibuya in 1933 and completed the run to Kichijoji in April 1934 — a cross-town line linking the southwest of the Yamanote loop to the Chuo line, entirely unlike a radial commuter route. In May 1944 the Land Transport Business Coordination Act folded Keio Electric Tramway into Tokyu, alongside Odakyu and Keikyu, and Inoue withdrew to an advisory post. After the war, former Keio employees pushed for separation, and in June 1948 Keio Teito Electric Railway was established with capital of ¥50 million, taking the Keio Line, the Inokashira Line and three bus depots with it. The pairing of a radial suburban line and an urban cross-town line — a combination few private railways have — was not a Keio design. It was what the wartime consolidation happened to leave behind.

Separated from Tokyu in June 1948 and listed on the Tokyo Stock Exchange in May 1949, Keio spent the postwar decades doing what a Japanese private railway does: turning the land and the terminus it controlled into businesses that a fare box could never fund. Real estate began in 1955, with housing development along the line. In 1961 it founded the Keio Department Store, connected directly to Shinjuku station — the busiest terminal in the country — and the retail segment it anchored was still turning over $1.9B (¥170bn) with ¥4.7bn of operating profit in the year to March 2010.

The 1960s set the rest of the template. The Takao Line opened from Kitano to Takaosanguchi in 1967, giving Keio the mountain that remains the biggest tourist draw on its network. Keio Plaza Hotel was set up in 1969 and opened in June 1971 on the west side of Shinjuku: forty-seven storeys, Japan’s first skyscraper hotel, and the building that pulled the whole Shinjuku sub-centre development in behind it. Department store and hotel at the terminus, property and tourism along the line — the shape of Keio’s earnings was fixed by about 1970.

What came next was capacity and connection. The Keio New Line between Shinjuku and Sasazuka opened in October 1978, completing quadruple track and — built underneath Shinjuku station — anticipating what followed: through running with the Toei Shinjuku subway from March 1980, which carried passengers from the western suburbs past Shinjuku into the city without changing trains. In March 1990 the Sagamihara Line reached Hashimoto, completing the artery into the Tama New Town developments. Then, in July 1998, the company finally dropped the “Teito” from its name and became Keio Corporation — clearing away, half a century late, the last trace of the wartime merger.

Through the 2000s Keio kept enlarging property, and the interesting move was not another development but a change of premise. In January 2012 it bought Rebita, a renovation specialist, entering the second-hand housing market as new supply along the line flattened out — a shift from building more to re-using the housing stock the railway had already created. Property operating profit stayed high and steady, ¥9.1bn in the year to March 2010 and ¥9.4bn in the year to March 2019, the most profitable thing Keio did relative to its size.

The strength of that segment was unglamorous: station-front redevelopment and long-held rental buildings throwing off rent for decades, with unrealised gains piling up on assets like the Keio Plaza Hotel. Through the 2010s Keio’s financial ratios stayed conservative even by private-railway standards, interest-bearing debt was kept in hand, and investment capacity was preserved rather than spent — the posture of a company that expects to fund the next large urban project itself.

The third pillar came from leaving the line entirely. Around Keio Plaza Hotel the company built a hotel business that went where the tourists were: Keio Prelia Hotel Kyoto in 2017, Sapporo in 2018, and in 2020 a stake in the Takayama Green Hotel in the Hida mountains. By the year to March 2019 leisure and services turned over ¥76.2bn with ¥7.0bn of operating profit, against transport at ¥129.9bn and ¥14.7bn and property at ¥47.2bn and ¥9.4bn. Rail carried the volume, property carried the margin, hotels carried the growth, and consolidated return on equity sat in the 5% range — a structure that assumed, as every commuter railway did, that the population along the line and the habit of commuting would both persist.

COVID-19 struck exactly where Keio was strongest. Consolidated revenue fell from ¥433.6bn in the year to March 2020 to ¥315.4bn a year later — a 27% drop — as commuting, department-store footfall and hotel occupancy went at once. The assumption underneath the whole model, that the terminal fills every weekday morning, had never before been tested. Recovery took four years: ¥408.6bn in the year to March 2024, then ¥452.9bn with ¥42.8bn of net profit in the year to March 2025, past the pre-pandemic peak.

The answer to the shock was to rebuild the address itself. In 2022 Keio published a plan for the Shinjuku southwest gate district, jointly with JR East, and in 2023 committed to proceed — a total project cost of $2.1B (¥300bn) to convert its core site into a mixed district of retail, offices and an internationally rated hotel, in line with the city’s Shinjuku Grand Terminal concept. What the project has exposed is that even a railway sitting on prime central land cannot escape construction cost inflation and the shortage of contractors; the timing of the southern block remains unsettled and the northern block has been deferred.

The other change was to the company’s posture towards its own shareholders. At an earnings briefing in May 2024 Keio explained that, with individuals holding roughly 30% of the register, it would stay with dividends and not consider buybacks. A year later, in the HIRAKU 2030 plan of May 2025, it reversed that: a total payout ratio of 50% combining stable dividends with opportunistic buybacks, and a target of consolidated ROE above 9.0% — because with an investment peak due in 2030, dividends alone could no longer explain the company’s capital efficiency. At the same time it decided to merge the Keio Department Store with Keio SC Creation in the year to March 2031, putting Shinjuku’s retail operations under one roof.