Tuesday, May 27, 2008

Higher Fuel Prices Portend Uncertain Tourist Season In Alaska

An article published May 25th, 2008 in the Fairbanks Daily News-Miner illustrates the uncertainty that higher fuel prices are bringing to the tourist season in Alaska. Regular gas prices have just slipped past the $4.00 per gallon mark in Anchorage, and are higher along Railbelt communities in the Interior. Check HERE for latest Alaska gas prices. Pictured above left, the Big One, Mount McKinley

One account published by the News-Miner illustrates fuel costs associated with traveling up the ALCAN Highway. Jim and Wilma Fowler are driving a Ford F-20 diesel with an Airstream Safari in tow to Alaska from Oak Park, Calif., for a three-month trek in their son’s adopted state. Still early in their sojourn, the Fowlers have put in 5,000 miles and have already paid $2,300 for the diesel fueling their Ford F20.

Overall, the Alaska Travel Industry Association expects that they would be lucky just to duplicate last year's record season, which saw 1.7 million-plus visitors who spent more than $1.5 billion in the state. “I’m concerned. If we are flat overall, I would be pleased,” said association president Ron Peck. “I hope we reach the same level as last year. If I’m wrong and we get above that, I’ll be tickled pink. But I would not bet my next born child that we are going to have an increase in visitors.”

But although a random sampling of hotels and B&Bs suggests a solid summer, the Bed and Breakfast Association of Alaska estimates that bookings among its members are already down by as much as 20 percent.

In contrast, wilderness guides catering to wellheeled clients are more optimistic. Hugh Rose, a Fairbanks-based photographer and guide, said he is booked solid for 11 excursions, which can run as high as $8,300 for a 20-day trip that includes treks at Prudhoe Bay, Prince William Sound and Denali National Park and Preserve. He said he’s already filled all seven slots for that trip in 2009 and people are waiting for him to set dates for 2010 so they can put down their $500 deposits. “The clientele I deal with is, for the most part, fairly upper end,” Rose said. “The mortgage crisis did not affect them because their house is paid for. They are upper middle class and retired.”

Some businesses are seeing more foreign travelers taking advantage of the sagging dollar. For that same reason, Alaska can attract Americans forgoing overseas trips, according to the Anchorage Convention & Visitors Bureau.

An upsurge in foreign travelers capitalizing on a weak dollar is expected. In addition, American travelers who would otherwise vacation outside the United States for an "exotic" experience might chose to look upon a trip to Alaska as a substitute.

Cruise ship passengers, the backbone of Alaska’s travel industry, are expected to remain on par with last year’s numbers — slightly more than 1 million. But that’s because the cabin capacity remains unchanged and cruise line companies offer deep discounts when necessary to fill their rooms, said former Republican gubernatorial candidate John Binkley, president of the Alaska Cruise Association. But Binkley believes that will be offset by reduced spending away from the ships, with passengers buying fewer souvenirs and taking fewer, less expensive, shore excursions. Binkley said his own bookings are down about 10 percent in his family’s Fairbanks-based business, Riverboat Discovery, which offers sternwheeler day tours on the Chena and Tanana rivers.

Also down are campground bookings, if two RV parks owned by Scott Reisland in Denali National Park and Preserve are any indication. Bookings of caravans — groups of RVs traveling together — are down 50 percent and there have been a lot of cancelations, Reisland said.

Fuel prices — approaching the $4 a gallon mark for regular unleaded nationwide — could be a significant deterrent, judging by an industry consumer study of people interested in driving to Alaska through Canada. Six percent of the respondents said gas prices would be a deterrent in the fall of 2006, when the national average for unleaded was just under $2.25 a gallon. A year later, when the national average for unleaded was inching toward $3 a gallon, the number had jumped to 21 percent. Still, workers at the visitor center in Tok — the first major Alaska community after crossing the Canadian border — say they’re seeing the same level of RVs as they did last summer. Some RV rental companies are, too. Of course, like the cruise ship visitors, they might make up for it by spending less once they get here.

This summer looks promising for Dan Oberlatz, owner of guiding company Alaska Alpine Adventures, which is an affiliate of outdoor gear retailer Recreational Equipment Inc. and also runs other guided tours. Oberlatz, however, said he set his fees a year ago, never imagining fuel prices would skyrocket, inflating the cost of ferrying clients in vans and air taxis. He plans to raise next year’s prices on the assumption the cost of fuel will keep climbing. “If the recession continues, if gas prices continue to go up, 2009 could be the year of reckoning for Alaska tourism,” he said.

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