(From Cruise Industry News Quarterly Magazine – Summer 2009)

“The cruise industry represents a significant part of the tourism sector for the state of Alaska,” said Joe Austerman, director of the office of economic development,who was speaking to Cruise Industry News on behalf of Governor Sarah Palin. “Last summer, 1,033,000 million visitors arrived in Alaska on cruise ships,” he said, or 61 percent of all the visitors to the state.

While bookings to Alaska have softened this year and cruise lines have pulled capacity out for 2010, Austerman attributed the softening in cruise bookings to Alaska partially to the economic downturn and partially to what he said may be a maturing of the Alaska cruise business model, which has been growing aggressively for years.

As for the $50 head tax, Austerman said that “the tax revenue is for communities and infrastructure that support the cruise industry. It is a cost associated with accommodating the passengers.

“We have to work to ensure that our terrestrial and marine environments remain pristine. That costs money. Maintaining Alaska’s natural beauty and unspoiled wilderness is also in the best interest of the cruise lines, since this is what draws passengers to Alaska.

“We are still working to make a determination how the money will be spent, while addressing the needs of the cruise industry at the same time, as well as the cost to Alaska for serving the industry,” Austerman said. Plans call for the revenue to be used for roads, docks and other infrastructure needs, including wider sidewalks and public restrooms.”

Industry Needs

The cruise industry owns much of the non-marine shore-based infrastructure it uses in Alaska with the exception of a few vendors, according to Austerman. Princess Cruises and Holland America Line are the most significant property owners in Denali National Park, for instance.

“The cruise industry brings a considerable volume of passengers into port who spend money on tours, activities and merchandise,” he said. “But we are not sure how many dollars hit the ground and stay here. I suspect that the independent travelers on land leave more dollars behind.”

Nevertheless, Austerman said Alaska looks upon the cruise industry as a partner and is sensitive to its needs. “We realize that the cruise lines are businesses, and they are here to make money,” Austerman pointed out, adding: “For what Alaska has to offer, $50 is a not a significant fee. Other cruise destinations also charge taxes and fees – often much more than we do.

“On the whole, Alaska is tax friendly both on the corporate and individual level.”

Austerman said that the state’s environmental laws may be unique to Alaska, but they are designed to preserve the unique pristine environment of the state. “There are not many places left in the world – with pristine waters, untouched wilderness and eco systems,” he said.

Alaska Growth

Next year, there will be more regular calls in Anchorage, and Austerman also expects extended opportunities for more western and northern ports as the ice retreats. Smaller ships can sail to the western part of the state, he said, and to the Gulf of Alaska, where the economies are depressed and cruise tourists could make a big difference. Tourism would be a way of drawing new dollars into those communities, he said.

Alaska also hopes to convert cruise visitors into returning land visitors. “We value the fact that the cruise industry brings so many tourists here, exposing them to the state and what we have to offer. What we hope is that through their initial exposure, they will return as repeat visitors,” Austerman said.

“We want to grow the cruise industry in Alaska,” he continued. “We see no value in a shrinking market. The cruise industry has been very valuable to Southeast Alaskan economies. We need to work together to make sure that we address the issues in a mutually beneficial manner. Without the capitalist model, the cruise lines would not exist. We understand that they need to be profitable here, but they must be good for Alaska, too.”