Tuesday, May 12, 2009
Alaska's 2006 Cruise Ship Initiative, Coupled With Recession, To Cost Alaska 140,000 Visitors, 1,800 Jobs, And At Least $72 Million In 2010
Alaska's misguided vote in favor of the 2006 Cruise Ship Initiative is expected to cost the state 140,000 visitors, 1,800 tourism-related jobs, and a loss of $72 million in annual payroll in 2010. Regionally, in South Central Alaska, there will be 300 cruise-related jobs lost in 2010 out of 3,000 employed in a typical year, while in the Interior, there will be 309 jobs lost of 2,500 usually employed due to cruise ship tourists. The effect is likely to persist through 2012.
This assessment comes from a highly-respected source: Ralph Samuels, who is Holland-America Line's vice president for Alaska. Samuels, a highly-respected former member of the Alaska State House who was an acknowledged expert on resource issues, recently presented the dismal projections on lost passengers and jobs during an April 30th meeting of the Resource Development Council in Anchorage. You can access the transcript of Samuels' remarks and two YouTube videos HERE.
The redeployment in 2010 is a one-two punch against the state's tour industry, however, because 2009 is likely be a down year as well. Even though ships and passengers may still come north, tourists are likely to tighten their wallets. Cruise ships will operate because schedules have been committed and the companies will fill them through heavy discounting. One company is now offering a seven-day cruise to Alaska for $299.
Collateral damage will be inflicted on land tours to Denali National Park and Fairbanks from cruise ship ports in Seward and Whittier. For example, reservations were down 40 percent from last year for the locally owned Riverboat Discovery tour in Fairbanks, and the family-owned company will probably hire a third fewer people to staff the operation in 2009.
The Alaska Travel Industry Association is even more pessimistic - they believe Alaska will lose as much as $130 million in 2010. They project that each Alaska cruiser spends an average of $1,000 on the beach.
As for 2010, Alaskans helped encourage the departure of the ships by approving a $50-per-passenger tax as part of the 2006 Initiative. To top it off, much of the money hasn't even been spent because of legal questions over what it can be spent on. It's still sitting in the state treasury, because the federal commerce clause bars states from imposing taxes on trade with other states except under certain circumstances. So the tax revenues must applied to things that benefit the cruise ships or its passengers, or it runs the risk of being ruled unconstitutional.
In addition, the 2006 Initiative imposed unrealistically high and costly environmental requirements on the ships. In 2009, the state legislature attempted to mitigate the problem by passing HB134 to give the Alaska Department of Environmental Conservation authority until 2015 to waive application of the most stringent standards, but cruise ships in Alaska have already met some of the initial requirements of the 2006 Initiative.
But supporters of the 2006 Initiative remain stolidly unrepentant and unapologetic, insisting that the recession is the main cause, and accusing the cruise industry of manipulating the numbers. As previously cited HERE, one of the sponsors of the 2006 initiative, Gershon Cohen of Haines, is trying to spin it. He claims the ship shift is more likely about profits than the head tax. "They're redeploying ships in Europe because the American economy is falling apart and the middle class in America are not buying as many cruises and not spending as much money on board the ship as they have in the past," Cohen said. "It has nothing to do with the $50 head tax".
But although the national recession set the stage for the problem, cruise operators universally decry the 2006 Initiative, particularly the head tax, as the straw that's breaking the camel's back. And several independent and influential travel publications like Cruise News Daily, Cruiseblogger and Travel News are also singing the same tune. Johanna Jainchill, a writer for Travel News, wrote, "Recent decisions by cruise lines to redeploy ships from Alaska because of high costs imposed by a 2006 citizen referendum reflect the confluence of the recession, which has cut into Alaska cruise prices, and the provisions of the measure, which add to the cruise companies' costs of operating in Alaska."
This is the risk incurred with citizen initiatives. People can be far too easily manipulated to vote with their hearts instead of their brains. And Alaska loses as a result.