Another tough year for Alaskan tourist industry
SEATTLE — As the Alaska cruise season starts, Seattle's happy. Vancouver isn't. Alaska, yikes.
A complex brew of economics, regulations, tax fights, politics and the arcane art of predicting what ships should go where has state officials estimating that 140,000 fewer passengers will cross Alaska docks this summer, costing millions in tourist dollars.
"Tough, tough, tough," says John Binkley, president of the Alaska Cruise Association. "It'll be a hard season."
The first northbound trip starts Monday in Seattle, with Holland America Line's MS Amsterdam leaving on a two-week cruise. In all, Seattle expects a record 228 port calls this summer, five more than in 2009 and nearly all to or from Alaska.
Vancouver launches its Alaska season May 9 when Holland America's MS Ryndam leaves. But hard times and competition from Seattle have just 179 ships calling at the Canadian city, nearly a third fewer than last year's 256.
Alaska offers incomparable scenery - glaciers, mountains, peaceful islands, wild terrain. Plus there's gold rush history and a wealth of shore activities, from fishing to whale watching to just browsing the shops on Ketchikan's Creek Street boardwalk.
That's brought huge tourism growth over the past decade. But the state is facing a second tough year as cruise lines cut the number of ships from 28 to 25.
About 883,000 cruise ship visitors are forecast this summer, down 14 percent from approximately 1 million in 2009. Economists say that means a loss of about $150 million in spending.
For the countless shoreside businesses angling for a share of the $1.5 billion or so that tourists spend, it's meant belt tightening and offering new attractions. Binkley, who also runs Fairbanks riverboats, says he's had to cut 70 of his company's 200 jobs.
Others point out that Alaska has always had a boom and bust economy; businesses quickly adapt or die.
"It's a great concern but we're bracing our feet," says Karen Hess, who with her husband runs tour boats and a ferry service out of Haines and Skagway in southeast Alaska. "And we're adamant we'll make it through."
Aggressive pricing in the depths of the recession last year meant cruise passenger visits stayed about the same as 2008. But the rock-bottom deals - under $500 for some trips - also attracted bargain hunters reluctant to open their wallets. Total state visitor spending was off 15 percent, or $270 million.
Cruise lines sent 28 ships to Alaska in 2009, but cut that to 25 this year, choosing to operate more ships in Europe and other hot markets. Money's the reason, but industry officials and cruise line executives say their main gripes are Alaska's stringent environmental regulations and especially its $50 "head tax" on each cruise passenger entering the state.
Environmentalists who pushed through the 2006 citizens' initiative establishing the regulations and tax vehemently disagree, but cruise lines say current technology can't meet the clean water standards for ship discharges. And they say the head tax gouges them and is enough to make the difference on thin profit margins - and to send ships where they don't have such problems.
"We don't mind paying our fair share of the way," says Stein Kruse, president and CEO of Holland America. "We don't mind our passengers paying head taxes. But to punitively tax out-of-state visitors simply made no sense."
Alaska also may have gotten complacent, with "a soak-the-tourist kind of mentality up there lately," says Paul Motter, publisher of CruiseMates.com.
"I think Alaska has to get a little bit smarter" on promoting itself and tourism in general, he added.
After heavy lobbying by Kruse and others in the industry, Gov. Sean Parnell helped push a bill through this year's legislative session to lower the tax to $34.50. State regulators also have temporarily eased some of the environmental requirements and legislators have boosted marketing money for tourism.
With decisions on where to deploy ships made about 18 months in advance, that won't affect the 2011 season, when the major lines plan to drop two more ships from Alaska runs. But Kruse says the changes have given him "a much renewed sense of optimism for Alaska" in deciding 2012 deployments.
Vancouver officials also hope for a turnaround. Disney, Crystal and Oceania have announced plans to begin cruising out of Vancouver in 2011, though with smaller ships than the major carriers. Greg Wirtz, manager of trade development for Port Metro Vancouver, says it hopes for a tourism bounce from the immeasurable publicity of the Winter Olympics.
But Seattle's a tough competitor, having spent millions to steadily grow its cruise ship trade from a measly six vessel calls in 1999.
Though increased security after 9-11 has made it harder to cross the Canadian border, John Hansen, president of the Vancouver-based Northwest CruiseShip Association, says it's not anything that Seattle is doing right or Vancouver is doing wrong.
"The major factor has been that it's easier and cheaper and more convenient for people to fly into Seattle," he says.
There are signs the worst may be over for Alaska.
Barry Swanberg, general manager of Phillips Cruises and Tours in Whittier, says he's getting more bookings. Though "that's not saying much" because 2009 was so bad, many businesses, especially larger hotels, report the same, he says.
Airlines have recently increased the number of flights to the state, which also helps, Swanberg says.
"Nobody is waving the flag that they're going crazy, but everybody is saying it's better," he says.
Alaska is "really a smoking bargain now," Motter says. "Last year it was an incredible bargain, now it's still a great bargain."