Last year, faced with an expected downturn of 14% of its cruise visitors, Alaska’s tour operators, lodge owners and tourism officials were determined to find new sources of visitors. They turned to independent and group travel, international travelers and even Alaska residents.
But one year later, having weathered both 2009 and 2010, members of the Alaska Travel Industry Association who gathered in Santa Barbara, Calif., recently for an annual meeting with members of the media admitted they had found no way to make up for significant capacity cuts by cruise lines in the last two years.
Ron Peck, the association’s president, said that ATIA estimates for summer 2010 show that Alaska tourism was rebounding from the depths of 2009 in many areas.
Air passengers were up despite the loss of cruise passengers, thanks to additional direct flights from cities such as Philadelphia, Denver and Portland, Ore.
Car rentals were also up, as was revenue from the state’s bed tax and from the number of people riding the ferry system.
"We’re improving, but we’re not totally healthy yet," Peck said. "If you take the ferry and the air and get it up 20%, that’s a marketing miracle, it’s not realistic. … We are appreciative that there was additional capacity and things are improving, but you can’t replace that loss of cruise and cruise tour passengers just like that."
Even so, he said, Alaska is now "trending in the right direction."
Peck also said last month’s announcement that Princess Cruises would be adding a fourth ship on its Vancouver-to-Whittier route in 2012 was great news.
"For one of the big three to bring back a full ship is very exciting," he said, referring to Holland America, Princess and Royal Caribbean. "A substantial number of those guests will take cruise-tour programs."
While Alaska tourism interests continued to broaden their marketing to other groups, they also focused on helping bring back cruise ships.
Gov. Sean Parnell "realizes the importance of the cruise industry to the economy of Alaska, Alaska businesses and, just as importantly, jobs," Peck said. 'He is working very hard to help bring the industry back to a healthy state. The industry appreciates it."
Carol Fraser, regional director of sales and marketing for Denali Park Resorts, which has two lodges at Denali National Park, was part of a group of people in the tourism industry that formed the Alaska Alliance for Cruise Travel last year after cruise lines began pulling capacity.
The group’s mission was to educate the Alaska government, in particular Parnell, about the importance of cruise travel to the state’s businesses.
"We wanted the voice of small business in Alaska to go to the governor," she said. "We educated him on cruise travel in Alaska. We educated him on [the economic impact of] losing cruise ships in Alaska. He’s a brilliant governor, and he wasn’t informed about that impact."
The governor’s decision to go to Miami and talk to cruise line executives at the annual Seatrade show in March, and to then sponsor a bill reducing the head tax, was more than the group had expected.
"He didn’t just support the change; he sponsored it," Fraser said. "It was more than we ever thought he would do. It was huge for our industry. It passed. The taxes are reduced, and Princess brought the ship back. Hopefully, that will encourage other cruise lines to come back, as well."
Fraser said that among the group’s founding members, 80% to 90% of their business is based on cruise travel.
She said Denali did experience an increase in independent leisure travelers over the last year, thanks in part to seven more flights into Anchorage per day, but she added that it would be impossible to increase those numbers enough to make up for a 26% downturn in cruise travel to the park in 2010.
Fraser said that the group’s efforts have resonated not only with Alaska’s government but with the general population, as well.
"When they see a bunch of business owners speaking to them about this, we get a lot of support," she said. "They now understand that tourism affects everything in Alaska: gas stations, Walmarts, grocery stores, floral shops — everyone is affected."
Fraser was one of many members of the ATIA who were ecstatic about Princess’ decision to bring a cruise ship back in 2012.
"Gulf cruise ships feed directly to Denali," she said. 'We will be up quite a bit in '12 over '11. … It’s huge for everyone."
Cruise passengers who go to Alaska tend to spend more money on tours than passengers in other destinations.
For example, Royal Caribbean International reported that while in Juneau, roughly 61% of its guests book shore excursions, compared with the Caribbean destination of Nassau, where only 18% do.
The ATIA said that, on average, about 20% of cruisers book land tours through a cruise line or an independent tour operator.
Holland America Line said that about 50% to 60% of its passengers take the line’s tours in Alaska. Among passengers on seven-day cruises, two-thirds book land tour/cruise combinations.
Casey Ressler, marketing and communications manager for the Matanuska-Susitna Convention and Visitors Bureau, also hailed the return of a fourth Princess ship, noting that its cross-gulf itinerary, as opposed to an Inside Passage cruise, would bring 40,000 visitors to south-central Alaska.
"Those 40,000 visitors will dock in Whittier, giving south-central Alaska communities, such as Mat-Su Borough, an opportunity to have them visit via post-cruise land packages," he said.
Mat-Su held up better than many parts of Alaska. Its 2010 bed-tax revenue was flat compared with 2009, which in turn was down 9% compared with 2008. That drop, however, was a relatively low number in Alaska, where many communities experienced declines between 10% and 20% in 2009.
The fact that the bed-tax revenue was flat in 2010, Ressler said, was "a good thing, unfortunately, given the way the economy has been going and [given] the cruise berth reductions this year."
Mat-Su was able to stave off another downturn mostly by turning to state residents. When the CVB realized cruise traffic was going to be cut so much, it started aggressively marketing in-state.
The borough launched a "Valley Values" campaign that targeted Alaskans, promoting the Mat-Su Valley as a "staycation" option.
"We were very happy with the results," Ressler said.
Princess’ decision to return a ship to Alaska was made in part because the cruise line, like other ATIA operators, suffered from a decline in its own product.
Princess is also the largest hotelier in the state of Alaska, and the biggest hotel there is the Denali Princess Lodge.
"We have such an investment in Alaska," said Princess spokeswoman Karen Candy, "Our goal is to have higher capacity. Having one ship out certainly affected the cruise tour product, with not as many people going to the interior."
Deb Hickok, president of the Fairbanks CVB, said visitors to the interior of Alaska have historically been half cruise travelers and half noncruise.
She said Fairbanks businesses fared better or worse in 2010 depending on to whom they catered primarily. She said many businesses had built their model on the cruise passengers.
"More-diversified businesses did better, while those [dependant on] a high volume of cruise/land-tour visitors were flat or down further," she said.
Compared with the dismal months of 2009, bed taxes were up, along with occupancy and room rates this year, thanks to an increase in independent, long-haul and international visitors.
"Some saw an increase in independent and traveling friends and family, but it hasn’t made up for the losses in the cruise tours," she said.
"Princess was more than welcome news," she said. "We hope it’s the first of more announcements."
Hickok said cruise passengers were good for all Alaska business, because "27% of first-time cruisers to Alaska return to Alaska."
She also noted that the more savvy cruise travelers tend to arrange their own land tours.
"There are many businesses that are cruise dependent, but they don’t know it," Hickok explained. "They just know that person is traveling and is independent."