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Cruise industry brings in nearly $1 billion to state economy: the cruise industry spends between $50 million and $70 million on marketing the state, which is several times larger than what the state spends to get the word out about an Alaska vacation.

Just 10 years ago, a trip to Alaska was a dream vacation for the average traveler. Today, setting your compass to America's far north is becoming a more common occurrence and the state is reaping the benefits of a healthy tourism industry. From the Inside Passage to the Arctic Ocean, the communities that comprise America's far north have experienced unprecedented growth in the number of visitors that choose to visit Alaska every year. To support the expanding numbers of visitors, large and small businesses throughout the state now offer a variety of tours as well as providing infrastructure to keep Alaska's second largest industry chugging along. But if tourism is one of the state's economic engines, it's an outside party--enter the cruise industry, the mighty caboose pushing Alaska's tourism industry to new heights every year.

"With the numbers that we have, we can surmise that by the end of 2005 the cruise industry will bring in close to a billion dollars into the state," said Jim Calvin of the McDowell Group, which conducted a cruise industry economic impact survey based on the 2003 summer season. "That number does not include the cost of the cruise or what people spend on the boat--it only represents what people (both crew and passengers) will spend in the state."

According to this study, the direct and indirect spending that can be linked to the cruise industry in 2003 totaled out to $878 million and the numbers for 2004 were expected to be higher. Along with the direct infusion of cash into the state, the cruise industry also provided an average annual employment rate of 12,400 jobs--peaking at 21,000 summer positions that were associated with cruise-related activities. Plus, the industry dropped about $30 million into local government bank accounts through sales, bed and property taxes as well as moorage fees.

"The cruise industry is vitally important to Alaska's tourism sector because they represent more than 60 percent of our summer visitors," said Ron Peck, president of Alaska Travel Industry Association--the state's official marketing organization. "And that number does not only represent Alaska's coastal ports; in excess of a quarter of the cruise ship passengers that come through the state go up to the communities in Southcentral Alaska and the Interior on land tours."


According to the Northwest Cruiseship Association--an organization that represents all of the large cruise companies that visit Alaska--the communities of Juneau, Ketchikan, Skagway and Sitka are considered the "four cornerstones" to the cruise industry's Alaska market. In 2003, these ports attracted the largest number of cruise ship visitors starting with Juneau that received 780,000 passengers, followed by Ketchikan with 770,000, and then Skagway with 628,000 and Sitka with 257,000. Other Southeast ports include Wrangell that welcomed 39,000 cruise ship passengers in 2003 and Haines with 29,000. Last year, Point Sophia in Hoonah--a destination created for the cruise ship industry--attracted ships for the first time but exact passenger numbers are not available at this time.

Along with the communities that line Alaska's famous Inside Passage, the ports in Southcentral Alaska (Seward and Whittier) also receive cruise ships. In 2003, Whittier was not yet open but Seward welcomed 293,000 cruise ship passengers.

"The economic impact is very significant in all the communities that the ships call at," said Northwest Cruiseship Association President John Hansen. "That impact is comprised of passenger spending on shore excursions, souvenirs and mementos as well as what crew members spend in the state. The cruise industry also provides business opportunities for residents and jobs. Many of the cruise industry employees live in Junean and Ketchikan and are a vital part of those communities as well.

"We think it's important that we take part in the life of the communities that we do business with and support the good things that happen," added Hansen, whose organization's Web site states that the cruise industry contributes $2 million annually to Alaska's nonprofit organizations. "All the cruise lines take part in the communities that they call at by supporting sport teams, and social and cultural events."

In Juneau, the destination that attracts the largest amount of cruise passengers in the state, the industry's impact is far-reaching.

"The cruise industry is a very critical piece of Juneau's economy," said Juneau Convention and Visitors Bureau President and CEO Lorene Palmer. "Its impact from May to September carries many businesses throughout the year. For example, it allows flight companies that offer commuter services to residents to operate year-round. Its impact affects many businesses that are not even directly related to the cruise industry."

Although Juneau is one of the few communities that charges a head tax for cruise passengers, the money raised from this tax must be used for cost of service to the cruise ships or to enhance the safety and efficiency of the industry. Along with maintaining the docks and the roads, the city also needs to hire crossing guards in the summer as well as additional police and emergency medical technicians. According to an outside consulting firm hired by the city, Juneau incurs $1.3 million in indirect impact costs from the cruise industry on an annual basis along with direct impact costs such as trash removal, additional personnel, and even medevac charges that are not recovered.

"Our costs increase dramatically in the summer but the benefits far outweigh the impacts," said Juneau's City Manager Rod Swope. "The cruise industry brings a lot of revenue to the city and that impacts the entire community."

In Anchorage--a city that shuttles its cruise ship passengers from Seward or Whittier via bus, or railroad--$108 million of annual revenue can be tracked back to the cruise industry.

"The cruise industry is certainly a vital part of our tourism market," said Nance Larsen, Anchorage Convention and Visitors Bureau vice president of communication and marketing programs.

In 2003, approximately 300,000 cruise ship passengers came through Anchorage and that number is expected to increase by 5 percent this summer, said Larsen.

"Anchorage is uniquely situated to offer a city and back-country experience," added Larsen. "You can be in the city and enjoy all the of the many tours and options associated with being in a metropolitan location, but you also can be in the back country within 10 minutes and there are tours to experience that as well. We've been successful in selling both options (and combinations thereof) to cruise ship passengers."


While ships can't sail on land, through a variety of add-on packages, cruise ship passengers can continue their Alaska "cruise" through land tours that explore much of the state's Interior.

"Almost 50 percent of Fairbank's summer visitors are related to the cruise industry and that number is increasing due to continued improvements in our infrastructure," said Deb Hickok, president and CEO of the Fairbanks Convention and Visitors Bureau. "We serve as a hub of sorts for land tours. We have great attractions here but we also are the jumping off point for the Arctic Circle and being close to Denali is another asset."

With a Holland America and Princess hotel within the city limits, Fairbanks is an anchor for many cruise-related land tours that impact all types of businesses such as other hotels, restaurants, tour operators, and even bed and breakfasts.

"It's a myth that cruise-related activities only impact big businesses," said Hickok. "Lots of Alaska small businesses are affected by the cruise industry. While Holland America and Princess may use their facilities, other cruise lines that don't have hotels in the area use other facilities that may push independents to bed and breakfasts. There is definitely a trickle down affect--not only in the accommodation industry but also in all tourism-related industries."

Along with cruise passenger-related activities, the state also benefits from "behind-the-scene" activities from the industry.

"Besides the direct and indirect benefits from the cruise lines' contribution to the state, there are other things that assist the state's tourism business like marketing," said Charlie Ball, president of Princess Tours. "The cruise industry spends between $50 and $70 million on marketing the state, which is several times larger than what the state spends to get the word out about an Alaska vacation. The Alaska brand in the market place provides some good interest development for everyone--not only the cruise industry.

With seven hotel properties in various locations throughout the state, Princess has contracted work with Alaska architectural firms, geotechnical consultants and contractors.

"We did the preliminary work on our lodges in-house and then we realized that working with Alaska architectural and engineering companies gave us more horsepower," said Ball. "We've had great luck working with different groups all over the state to do our projects.

"Almost a quarter of all cruise passengers that visit the state will take a multi-night tour--anywhere from three to seven nights in the Interior primarily. We have an Alaska vendor list of 1,700 businesses that includes fuel vendors, heavy maintenance facilities, rolling stock (buses, service vehicles, luggage trucks, vans, etc.) vendors, logistic and food providers, and tour operators.

"When our business does well, it's felt on a much wider footprint than just our partners," said Ball. "If hotel occupancy rises in Anchorage and Fairbanks--then general room rates go up because there is more demand. If we can create more demand--everyone does well. All boats rise on an incoming tide."

Nine major cruise lines will visit Alaska this summer along with a dozen smaller cruise operators. The Northwest Cruiseship Association is comprised of the following large cruise liners:

* Celebrity Cruises

* Carnival Cruise Lines

* Crystal Cruises

* Holland America Line--Westours

* Norwegian Cruise Lines

* Princess Cruises

* Radisson Seven Seas Cruises

* Royal Caribbean International

In total, 27 large cruise ships will visit the state this tourist season. Juneau, the destination that almost every cruise ship visits, expects 586 calls this summer from both the large and small cruise operators in the state.
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Author:Pardes, Joan
Publication:Alaska Business Monthly
Geographic Code:1U9AK
Date:Jun 1, 2005
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