Tourism industry is booming in Alaska

But budget cuts mean less funds for marketing

Alaska likely saw another record-breaking tourism year in 2016, according to preliminary numbers from the industry.

More than 1 million cruise ship passengers came through the state for the first time since 2009, according to the Alaska chapter of the Cruse Lines International Association. Border crossings from Canada were up 13 percent and numbers of outbound air traffic passengers between May and August were up 6 percent, both figures climbing for the second year in a row, according to figures from the Juneau-based research firm the McDowell Group.

The sales tax figures aren’t finalized yet, but it looks like another record-breaking year on the Kenai Peninsula s as well, said Shannon Davis, the executive director of the Kenai Peninsula Tourism Marketing Council, in a presentation Tuesday to the Kenai Peninsula Borough Assembly. Kenai Fjords National Park saw 14 percent more visitors this year than last, lining up with the McDowell Group numbers, she said.

The Kenai Peninsula is home to a booming tourism industry. Gross sales in visitor-industry related businesses reached $271 million in 2015, employing up to 4,217 people at a peak in July, according to the 2016 Situations and Prospects report prepared by the Kenai Peninsula Economic Development District. That includes accommodations, food service, local attractions like Seward’s SeaLife Center, guided land and water services and other revenue sources like the state’s commercial passenger vessel tax, according to the report.

The Kenai Peninsula Tourism Marketing Council receives funds from the borough assembly annually — about $50,000 in fiscal year 2017. Though the organization has always turned in quarterly reports, Davis said she plans to make regular reports in person to the assembly.

Marketing Efforts

However, not all the news was good. In the course of the budget cuts across the state this year, the governor vetoed funding for tourism marketing, reducing the state’s support to approximately $1.5 million from a budgeted $4.5 million. That number was already significantly reduced from $9.6 million in fiscal year 2016 and about $17.9 million in fiscal year 2015.

“Industry leaders have decided that this number is just completely unacceptable for the tourism industry to be able to remain competitive with … our competitors,” Davis said. “They are looking at different ways that they can turn things around for the industry.”

The Legislature’s intent is for the industry to find ways to sustain itself to rely less on general fund dollars, according to the appropriation bill. The Alaska Travel Industry Association is working through details of how to create a system that will allow the industry to fund its own marketing efforts. One idea being debated is to create a Tourism Improvement District in which tourism-related businesses would be assessed a fee that would go to statewide marketing efforts, said Sarah Leonard, the president and executive director of the Alaska Travel Industry Association.

“We feel like we’re following through with what the Legislature has asked us to do and work with (stakeholders) to get it fleshed out,” Leonard said.

A Tourism Improvement District would have to be created by state statute. Other cities and state have enacted them on a variety of levels and have shown success at generating marketing funds, according to the Destination Marketing Association International. If it were created, businesses would be asked to self-assess what portion of their revenue comes from tourism through a formula. Businesses would be identified by their Internal Revenue Service tax codes, Leonard said. The fees would then go into a fund to develop statewide marketing efforts, she said.

Right now, the association is gathering feedback from its businesses as to whether they would support such an effort. If something came forward, it likely wouldn’t be for another two or three years, she said.

The Alaska Travel Industry Association works to complement local tourism marketing organizations like KPTMC. However, there are efforts that may be beyond the financial or logistical reach for local organizations that would be better for a statewide association to handle, like national and international TV ad placement, she said.

“The whole conversation has been around statewide tourism marketing so that as a state we can continue to compete as a state,” she said. “…there are things that can be more targeted at the local level for different types of visitors too. But this (Tourism Improvement District) model has been focused on implementing this at a state level.”

Recently, Alaska hosted the Adventure Travel Trade Association conference in Anchorage, the association’s first meeting in North America. The meeting brough international attention to Alaska as a visitor industry destination, something businesses in the state are interested in pursuing further, Leonard said.

Locally, KPTMC is boosting its efforts with a new website, which is attracting more traffic and advertisements, and through its annual Discovery Guide, a print magazine with information about activities on the peninsula. The organization also recently raised membership dues for its approximately 286 members to $225 annually from $150. The new fee better reflects services the members receive through the new website, Davis told the assembly. KPTMC’s year runs from October to October, and membership is only down by four members from last year so far, she said. The increased fees don’t seem to have discouraged many businesses from becoming members, she said.

“We are anticipating that we’ll make that up easily before the end of the year with the new website,” she said.

Elizabeth Earl can be reached at [email protected].

Updated: 
11/04/2016 - 10:49am

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