Tourism up, but rough waters may be ahead

Michael Dinneen/AJOC

As expected, tourism has perked up this summer in Alaska and is generally meeting predictions. It appears the total numbers of visitors this summer will exceed 1.6 million, according to Ron Peck, president of the Alaska Travel Industry Association, the industry’s trade group.

Peck and Julie Saupe, president of Visit Anchorage, briefed the Anchorage Chamber of Commerce July 30 on the visitor the season so far.

Summer visitor numbers have climbed back from a low point of 1.53 million in 2010, after reaching a pre-recession peak in 2008 and 2009 of 1.71 million, Peck said.

This year a resurgence of cruise visitors is helping drive the increase. Cruise ship companies are expected to bring 1 million passengers to the state this summer, up from 960,000 last year and 880,000 the year before, he said.

Peck said non-cruise tourists are expected to total about 674,000, about the same as in 2011, but this total includes visitors coming to and from Alaska by air and those driving to the state via the Alaska Highway or the state ferry system. Tourists flying to the state have been steadily increasing while those driving to Alaska have been steadily declining.

“Alaska Airlines has been reporting very good ‘load factors’ for the available capacity on their Alaska flights and while this is being helped by the cruise industry there is always concerns over how many seats will be available,” to independent fly-only tourists, Peck said.

This year 65,000 highway and ferry visitors are expected, down from 69,000 last year and 76,000 the year before.

“The cost of fuel is obviously one cause but there may be are other factors as well,” including demographics, Peck said.

The average stay in the state by a highway visitor has shortened from 18 days a few years ago to 13 days, he said.

It’s just an impression, he said, but there seem to be as many or even more large recreational vehicles on the highways but fewer of the mid-sized or smaller camper-type units. Also, there are more people, usually younger, on motorcycles. This is a growing market niche that tourist marketers may have missed.

Saupe, of Visit Anchorage, said the Anchorage Municipality’s “bed-tax” revenue numbers confirm the visitor upsurge. Bed-tax revenue for the first quarter of 2012 were up 7.1 percent, and while second-quarter numbers aren’t totally in yet the collections for June alone were up 10 percent, Saupe told chamber members.

“Our members in the hotel business are reporting higher occupancy rates, up from 10 percent to 20 percent from last year,” Saupe said.

Things aren’t entirely rosy, however. Peck said the new federal air emissions rules that go into effect Aug. 1 will affect cruise ships as well as general ocean freight carriers. Special fuels the cruise ships will have to use could hike a typical cruise voyage cost by $65, the industry has estimated, which could have the effect of depressing passenger numbers as much as the state’s cruise passenger tax that was at about that level until it was reduced, Peck said.

Saupe said another concern by the industry is a change in the way the state manages tourism marketing with state funds. Previously, marketing, including advertising and promotion, was contracted to a trade association, the ATIA.

Last year the Legislature redirected the funds and charged the Department of Commerce and Economic Development with the administration. The arrangement is continuing in the current fiscal year, although the department wants to let a contract for some marketing activity and will have a Request for Proposals out soon for bidding, according to Robbie Graham, deputy commissioner at the Commerce Department.

At the chamber meeting, Saupe said the industry was happy that the governor and legislators are supporting more money for tourism marketing – $16 million this year, an increase from last year – but with the administration mainly shifted to the state, the private sector risks being cut out of key decisions.

Under the previous arrangement, marketing experts in the tourism companies made decisions on how the money was to be used.

Saupe said her concerns are not with the present state administration, which has been good to work with, but a future administration that may make decisions on a more political basis.

“We would like to see things get back to an industry-led program. We have a good relationship with the department, but our concern is for the future,” she said.

Graham, in an interview, said she and state Commerce Commissioner Susan Bell met with ATIA’s board recently to discuss how industry can be involved.

The shift of the program management from a private contractor arrangement to having the state agency manage things was made by legislators who were uneasy at seeing large amounts of state funds for marketing being administered by a trade association of the industry.

The closest parallel is the Alaska Seafood Marketing Institute, or ASMI, where seafood companies put up a little less than 50 percent of funds used for general Alaska seafood marketing. In 2012, the ASMI budget was $7.7 million industry, $7.5 million from the state general fund and a $4.5 million federal grant. ASMI’s primary purpose is to help market Alaska seafood in export markets.

With tourism marketing, less than $3 million is typically raised by the ATIA and the bulk of the funds comes from the state. One problem is that ATIA’s members are mostly small Alaska tour companies who cannot afford larger contributions.

The relationship between the state and the tourism industry on marketing has see-sawed back and forth over the years. In prior times the state had a Division of Tourism that was active in many areas and with a relationship with industry through the Alaska Visitors Association, the predecessor to the ATIA.

The Division of Tourism fell victim to the state budget axe, however, which caused many responsibilities for administration of the state marketing funds to be shifted to the private sector, through the revamped ATIA.

Now the pendulum seems to be swinging back toward, although the Department of Commerce and Economic Development is still working out how it will manage the programs.


Tim Bradner can be reached at [email protected].

08/09/2012 - 9:52am