ANCHORAGE, Alaska (KTVA-CBS 11 News) The beginning of tourism season will likely spell troubling economic times that city officials warn could translate into a $1 million loss for the Municipality of Anchorage.

On May 15, for the first time in years, cruise ships will dock at the Port of Anchorage, and busses will bring passengers downtown.

"From what we've been told, we'll see a ship every other Monday this summer. Possibly 1,500 people," says Ina Hunt who manages Trapper Jacks, TJs, Tracks and Moose Creek. "We're hoping that helps fuel the economy here."

Some merchants feel the docking Anchorage passengers could offset economic losses from seeing fewer overall passengers.

"Anchorage and Southcentral itself will see about 117,000 fewer passengers," says ACVB President/CEO Julie Saupe. "And it's about 150,000 fewer in all of Alaska."

Even though there will be less passengers, some Anchorage merchants think the ones who get off of the ships will spend more money.

"We're finding now, with the economy recovering people are more willing to do things on land. With us it's glacier cruises," says CIRI Alaska Tourism Marine Sales Manager Liz Johnson. "But we're finding they're spending a little bit extra on their vacation."

The Port of Anchorage call, however, is a mixed blessing for municipality hotels. Visitors will only be in the city from about 7:00 am to 11:00 pm.


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"We think bed tax wise it's just short of $1 million," Saupe says. "It's hard to say because each ship acts differently. But it definitely will be a hit in Anchorage."

To make up for the loss, many businesses plan on hiring less, especially those applicants from outside of Alaska.

"This year, instead of running an ad in the paper looking for help, we actually went out and talked to the high schools," Hunt says.

"We do want to hire those Alaskans first," Johnson adds.

Alaska Cruise Industry President John Binkley says the drop is due to the more expensive cost of doing business in geographically challenging Alaska.

"There's a lot of steaming time to burn a lot of fuel," Binkley says. "In the past they've been able to get a premium for the Alaska products. It's not that way anymore. The demand has fallen for the Alaska product."

The industry expects another 100,000 fewer passengers in 2011, and does not expect new state tax credits, and increased marketing money, to actually pay off as part of an expected recovery until 2012.

"Other competing destinations spend a lot more to attract visitors," Binkley says. "Just like with any business, if you don't spend money on advertising your customers will go someplace else. And that is what has been happening here."

Binkley takes on critics who say it was unnecessary for the legislature to grant tax credits, because in their view it is the world economy, not Alaska taxes, hurting travel.

"This year, worldwide, the cruise ship industry will grow 6.35 percent. So, it's a growing business," Binkley says. "It's just that those customers are going to other destinations, not just to Alaska."

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