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Tourism rides currents of change.

Tourism Rides Currents of Change

ALASKA'S TOURISM INDUSTRY during the 1980s floated merrily along on a comfortable state-funded advertising campaign averaging 3-10 percent increases in visitor counts most every year. Fueled by growing cruise ship arrivals and rising numbers of package-tour participants and independent travelers, tourism bobbed along on the ever-rising crest. Take Bob Dindinger, for example.

Dindinger, a former state tourism official, early last decade left his government post and started Alaska Travel Adventures, a firm that offers a host of tours statewide. Its first and still largest attraction is offering visitors to Juneau - predominately cruise ship passengers - a raft trip down the relatively tame Mendenhall River.

During the decade business boomed, and by last summer, more than 16,000 visitors were donning rubber boots and plastic rain ponchos. They enjoyed a unique view of Juneau's Mendenhall Glacier from its lake, as well as other Southeast Alaska scenery, and snacked on salmon on a sandbar along the way.

"The growth in the business has been good and steady. Let's just hope things remain that way," Dindinger said last year.

For his firm and for all other businesses that profit from cruise ship, air and road travelers, 1990 promises to be another good year. But there is growing concern over what the long-term offers - a continuing flood of visitors to Alaska or a slowing of the state's current tour bounty, in part because of the relative drop in state advertising support for Alaska's second largest employment industry.

View Behind. "There is no question that Alaska, given all the bad things that happened to us last year, fared very well," says Karen Cowart, executive director of the Alaska Visitors Association (AVA). The umbrella group represents the state's tour operators, fish and wilderness lodges, gas station owners, cafe proprietors and hotel and transportation firms making their livings from

"Between the whale rescue, the cold spell and the oil spill, we couldn't have gotten much worse publicity, and we still managed to hold our own and actually have an increase in visitors. That's the mark of a good year," she explains.

Dana Brockway, director of the state's Division of Tourism, characterizes 1989 as a great tourism year for Alaska - if not for every region of the state - given the negative publicity generated by the March 24, 1989, grounding of the tanker Exxon Valdez in Prince William Sound and the flood of news stories on the effects of the resulting nearly 11-million-gallon oil spill.

"Last year was very steady, slightly better than 1988 in visitor counts. When you remember all the adversity that affected the state, it was a good year," says Brockway.

As of February, preliminary estimates placed the state's rise in tourists in 1989 between 2 and 3 percent. That would mean roughly an additional 20,000 tourists visited the state last summer - about 750,000 from June 1 to the end of September.

In Southeast, cruise ship travel actually fell slightly in 1989, mostly a result of the 1988 bankruptcy of Exploration Cruise Lines. Between the loss of the Seattle carrier's four main ships and several changes in other schedules, such as Cunard Lines' pullout from Alaska trade, only 16 large ships called in Ketchikan and Juneau last summer - down from 21 in 1988.

The more-than-40-visit drop in sailings, to 227 to Juneau last summer, caused total cruise ship visitation to the Panhandle to fall by about 9,000 tourists. According to estimates by the Juneau Convention and Visitors Bureau based on U.S. Customs Service data, 193,777 tourists visited Juneau last summer - the most frequented cruise stop in the state - compared to 202,130 the year before.

Visitor arrivals via the Alaska Marine Highway System also were down slightly. A major reason was cancellations by out-of-state tourists concerned about a threatened late summer ferry strike by members of the Inland Boatmen's Union of the Pacific. That strike never materialized.

Travel to Alaska overall rose because of an increase in motorists who drove cars, vans and campers up the Alaska Highway and especially due to greater use of airline charters and fly-drive vacation packages.

Chip Waterbury, president of the Southeast Alaska Tourism Council and Haines tourism director, says there was an 11 percent increase last summer in highway visitors. Highway travel reached its highest level in the last 15 years at Haines, northern gateway to the ferry system.

Mary Klughertz, marketing associate for the economic consulting firm of McDowell Group/Data Decision Group Inc. of Juneau, says 1989's season was saved by the rise in visitors who flew to Anchorage and used the state's largest city as a hub for vacation trips to Mount McKinley, Fairbanks or the Kenai Peninsula. "There was a significant jump in air charters last summer, and that is a trend the industry will be watching carefully in the future," she explains.

AVA's Cowart says a poll of visitor association businesses found that, in general, tour firms last year saw 3-5 percent hikes in sales, although the trend was not universal.

While many Prince William Sound businesses, notably in Valdez, fared well economically by catering to oil spill workers, tourism counts in the sound still were down by 20 to 25 percent. Particularly hard hit were wilderness resorts and fishing lodges that couldn't overcome the negative publicity of soiled beaches, even if there were relatively few incidents of contaminated fish resulting from the spill.

Research by AVA last May found that about 26,000 tourists in key Lower 48 markets were considering cancelling their Alaska vacations because of the oil spill. Thanks to a $4 million contribution by Exxon, AVA increased advertising in those markets.

Followup research found that only about 11,000 potential travelers actually cancelled Alaska vacations. Most of that group were bound for Southcentral destinations.

View Ahead. For this summer - with two big wild cards still outstanding - the betting is that the state's tourism will see another strong year. Preseason estimates range from a 1-5 percent hike in total visitation by summer's end - possibly even more.

Size of the industry's growth will depend on how successfully cruise lines fill an extraordinary increase in cabin berths that will be available to Alaska this summer and on the outcome of the wild cards. Those swing issues are how much negative publicity the state receives from the oil spill, kicked off by last month's first anniversary of the disaster, and how much negative publicity and fallout - quite literally, ash - the state receives because of the continuing eruption of Mount Redoubt, 110 miles southwest of Anchorage.

Says AVA's Cowart, "In a real sense, we're captive of Redoubt this summer. If it would act up, foul airline schedules and actually pose hazards for visitors, it could spell a big problem for a part of the tour market."

What is clear is that 1990 will be the year of the cruise ship in Alaska waters. According to Kris Geldaker, administrative manager for Southeast Stevedoring, the booking agent for cruise ships to Alaska, 21 large vessels have scheduled 287 sailings to Juneau and 286 to Ketchikan. Many vessels' routes continue to Seward and Whittier. Besides a hike in the number of sailings, berthing capacity has been increased on several of the ships.

For example, Holland America Line, now owned by Carnival Cruise Lines of Miami, last October sent its Westerdam into the shipyards in Portland, Oreg., for a stretching that will add about 100 feet to the vessel and raise its capacity from last summer's 1,050 passengers to 1,500.

Princess Cruises, now in its second year of ownership of Sitmar Cruises, has added several vessels to the trade this summer, including the 920-passenger Dawn Princess. Also, the firm's 1,400-passenger Star Princess will make weekly, instead of biweekly visits to the Panhandle this summer.

For cruising fans, there will be more variety this year. Crystal Cruises, a new Japanese firm, will bring its 960-passenger Crystal Harmony to Southeast weekly this summer, and another Japanese firm has booked the Song of Flower, the former Explorer Starship, to Southeast, also weekly. The Song of Flower, which will hold only 240 passengers, is booking almost exclusively high-income Japanese tourists - the first time that the line has specialized in tapping the Japanese tour market.

For sailboat fans, the Wind Spirit will begin carrying 150 passengers a week from Prince Rupert to Juneau in June, while more rugged outdoor adventurists will be able to book trips on Special Expeditions' two vessels, the Sealion and a companion boat, possibly to be called the Seabird. The vessels, which hold only 70 passengers, will run weekly from Prince Rupert, British Columbia, to Sitka. They make no port calls, taking passengers only into remote wilderness areas. On the nonbeaten paths of Southeast waters, the vessels' tourists will use rubber floatables to visit beaches and glacier faces.

Clipper Cruising is offering a similar type of trip aboard its Yorktown Clipper for up to 138 passengers a week on one-way sailings from Ketchikan to Juneau.

"It looks like just a wonderful year for tourism to coastal communities because of the cruise ship trade," says Juneau gift shop owner Jerry Reinwand, who also serves on the 21-member board of the Alaska Tourism Marketing Council - the group that last year took over implementation of the state's domestic advertising-public relations effort. "Since the firms have booked the ships, they will increase advertising, offer discounts, do whatever is needed to fill up their boats. And that means a mass of visitors is going to be calling this summer," adds Reinwand.

Because there will be about a 20 percent increase in berths available to Alaska this summer, full vessels could carry more than 240,000 cruise ship visitors to the state. Winter booking reports were mixed: Some lines noted small increases in bookings over last year; others indicated steady, but not spectacular, booking increases; and few lines, as of February, had filled all the new berths. Only Special Expeditions had sold out the Sealion by early in the year, prompting scheduling of the second ship, according to Southeast Stevedoring's Geldaker.

Visitors will find offerings very similar to last year's. There will be no new major hotels in Southeast or Southcentral this summer, although construction will be under way on a new resort-hotel on land in downtown Ketchikan owned by the Cape Fox Corp., a Native village corporation. In Juneau, plans for a new waterfront hotel stalled over the winter, while the Anchorage area received gloomy news about developers abandoning both the Eagle River and Hatcher Pass ski resort projects.

The state is proceeding with its plans and seeking proposals this spring for a new hotel-resort development on the south side of Denali Park. And, on the brighter side, construction should start this spring by Alyeska Ski Resort on its $28 million, 300-room upgrade - a development that could well turn Alyeska into major ski resort, even with Anchorage no longer in the running as a Winter Olympic site.

State Spending. According to AVA, the critical issue for the tourism industry - which last year employed 19,000 people directly, affected 38,000 additional jobs, and pumped $626 million into the economy ($550 million being spent by visitors in Alaska) - is future state funding for the industry's advertising efforts.

Last year lawmakers appropriated $6.9 million to the Alaska Tourism Marketing Council as the state's donation to domestic advertising. Lawmakers increased total tourism funding to nearly $9 million, of which $1.1 million was marked for international and new destination marketing conducted by the regular Division of Tourism. While state spending rose last year by about 5 percent, Alaska's relative position among states conducting tourism marketing has been declining, and fast.

According to AVA's Cowart, Alaska's four major competitors for tourists are Hawaii, Canada, Europe and Mexico. Canada last year raised its promotions-advertising budget by 39 percent to $14 million, while Hawaii raised its budget by 33 percent for this year to $21 million. Even Illinois is outpacing Alaska, spending $20 million this year on tourism advertising.

Rep. Kay Brown (D-Anchorage), a member of the House Finance Committee, says, "It really is clear that we aren't keeping pace. Appropriations to tourism don't just help the tour companies or the urban centers, but tourism dollars get spread all over this state from Southeast and the Kenai to rural areas. We all know that it is important for us to hike funding this year, the only question is how much will be available when all the budget numbers get sorted out."

So far, Gov. Steve Cowper has proposed a maintenance-level budget for tourism promotion for next year. Rep. Dave Donley (D-Anchorage) proposed legislation that would add $3.8 million to this year's budget and leave to the finance panels the task of maintaining the hike for next year. Donley's proposal would provide $2 million to boost domestic advertising to counter the efforts of last month's negative publicity caused by the oil spill anniversary, plus $1.8 million more to spur foreign marketing. The foreign effort would specifically stress advertising to encourage foreign air carriers to continue to use the Anchorage International Airport.

"We've known for some time that if we're going to hold onto international travelers, that we were going to have to promote foreign travel. Now, with Redoubt volcano, the need is even more crucial," says Donley.

Between the greater use of long-distance aircraft - Boeing 747-400 planes - and volcano-caused traffic disruptions, a drop in international flights is threatening not only tourism, but the $18 million a year the state used to earn in revenue from sales at the Duty Free Shops in the international terminal at the Anchorage airport.

The AVA is asking lawmakers not only to fund more for international promotion, but also to nearly double the state's contribution to the domestic marketing budget, bringing it to about $12.5 million a year. In recent years, the state abandoned network television, placing all of its dwindling TV money into about a dozen key markets on the West Coast, in Texas and Florida and in parts of the Midwest.

If the AVA request was granted, the state could afford to restore ads to 10 more marginal regional markets and return to general image advertising on the network news shows. It also could afford the $500,000 cost of producing new network quality television spots.

While most lawmakers and gubernatorial candidates in this election year seem to favor some budget increase, the exact amount is uncertain. Still, the odds of a significant hike, given the state's generally rosy revenue picture, are better this year than in past years.

Another reason for optimism is that all facets of the tourism industry appear unified at present, and the industry and lawmakers appear at peace. The peace is partly attributable to Gov. Cowper's appointment of Brockway last year. AVA's former director, Brockway replaced Hugh Gellert, who had angered several segments of the tourism industry during his two and one-half year tenure in the post.

Says Alaska Travel Adventure's Dindinger, AVA's incoming president, "I think the stars are lining up for government and industry to move forward hand-in-hand."

According to a white paper on tourism developments prepared in January for Sen. Mike Szymanski (D-Anchorage) by consultant Mark Skok, another key reason for the improvement is the shift of Paul Meyerhoff, former director of the Alaska International Airport System to the overseas marketing job in the Division of Tourism. The position is part of an effort to promote international markets that is being widely endorsed by the visitor industry.

A significant budget increase before lawmakers adjourn next month won't solve all of Alaska's tour industry problems. There still will need to be a rational plan for how the money will be spent. But for the past six months, Brockway has been working on a new long-term plan for state tourism promotion - a plan that should have been presented to lawmakers within the last couple of weeks.

According to a draft of the plan, the state not only would adopt as a goal maintaining its current 750,000 visitors a year, but would aggressively attempt to break into overseas markets; increase its off-season visitation, especially in winter; and work harder to promote development of new attractions and to improve its basic tourism infrastracture.

A capital spending bill, proposed last year by Reps. Brown, Johnny Ellis (D-Anchorage) and Fran Ulmer (D-Juneau), would have pumped more than $10 million into improving tour attractions statewide, especially beefing up roadside pull-outs and other facilities for independent travelers. The bill currently is before the finance panels in the legislature.

Brockway says the long-term tourism plan is aimed at ensuring that tourism continues as a healthy, growing contributor to the state's economy - an important goal for a state that is watching its oil production start a long-forecast downward slide.

He adds that demographic trends are now on Alaska's side. With the aging of the baby-boom generation, there is a large bubble of affluent middle-income Americans that polls have shown are interested in adventurist vacations. Notes Brockway, "The trends are on our side. The only question is how aggresively we work to make good things come true for this state."

PHOTO : Typically, tourists riding the Mendenhall River in Alaska Travel Adventures' rafts are visiting Alaska on cruise ship vacations.

PHOTO : Janeau, the most frequented cruise ship stop, is expecting 287 sailings to its port this summer, up from 227 last summer.
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Title Annotation:Alaska
Author:Kleeschulte, Chuck
Publication:Alaska Business Monthly
Date:Apr 1, 1990
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