Homer Alaska - Business

Story last updated at 7:57 PM on Wednesday, May 18, 2011

Airfares, gas prices could hurt tourism

By Tim Bradner
Morris News Service - Alaska

Tourism officials still expect visitor numbers to increase modestly in 2011, but there are worries that rising airfares and gasoline prices may effect independent travelers' last-minute decisions to come to Alaska.

Independent tourists, who mostly make their own travel and booking arrangements, likely will drive what growth there is this year, while cruise visitors, still the industry mainstay, will be flat, tour industry officials told the Anchorage Chamber of Commerce May 10.

Expectations are that overall visitors this summer will be up 5 percent to 6 percent, Julie Saupe, director of the Anchorage Visitor and Conventions Bureau, told the chamber.

Increased air service to Anchorage this summer, including new service by Jet Blue and new charter flights by Korean Airlines, will bring more visitors to Anchorage, she said.

Domestic airline capacity will actually be down a little, but the flights are planned from cities that will make summer travel more convenient, so this shouldn't affect travel from the U.S.

John Binkley, president of the Alaska Cruise Association, said the numbers of cruise tourists coming to Southcentral Alaska in 2011 will be about the same as last year, mixed news considering 2010 was down 30 percent compared to 2009.

In 2012, however, added ships and more frequent sailings will boost the volume of cruise visitors, although not quite to levels of 2009 and 2008, he said.

"In 2012 Princess Cruises will add a new ship to its Alaska sailings, which will add 50,000 people. Disney will return for a second season, which wasn't confirmed until recently, and which will add 38,000 visitors, and Holland America will add 6 percent to its capacity through larger ships and additional sailings. This will add another 11,000," Binkley said.

Cruise tourists coming across the Gulf of Alaska to Southcentral will increase about 50,000, from 262,900 last year, Binkley said.

While cruise tour visitors, still the backbone of the industry, will hold its own in 2011, the growth in independent travel could still be dampened by high fuel costs, said Dee Buchanon, marketing vice president for CIRI Alaska Tourism Corp.

"These are things that affect all businesses, but we're paying 90 cents a gallon more for fuel than we paid last year, and a lot of suppliers are hitting us with fuel surcharges," Buchanon said.

CIRI's tourism businesses, which include two marine day-tour operations in Southcentral Alaska and three hotels, depend on independent travelers making their own bookings.

A significant change in the industry is that more decisions, particularly by independents, are being made in late spring, which makes it difficult for tour firms to know with confidence what their summer season will be like.

"We used to have a lot of our bookings done by September for the next season," Buchanon said. "Now, even by March we don't know what our reservations will look like."

The tightened market window is mainly a result of the Internet, and although Alaska firms like CIRI Tourism have become adept at Internet marketing, there's more online shopping around and people are making decisions later. "We're seeing research indicating that as much as 70 percent of the reservations are being booked from April through June," she said.

Ron Peck, director of the Alaska Travel Industry Association, said his group is aware of the trend and has adjusted its marketing.

ATIA used to operate its marketing efforts from September through March, but has now adjusted plans to continue marketing through late spring, Peck said in an interview.

Although fuel costs and other economic changes could affect independent travel, Peck said the core of the Alaska travel industry is still the cruise tours, where decisions are made sometimes a year or two in advance and reservations are locked in early.

The estimate of 5 percent to 6 percent growth this year came from the ATIA, Peck said, and it is based on surveys that have been done over several years and which have proved to be reliable indicators, despite ups and downs in economic conditions.

For a decade — since 2001 — ATIA has done a pre-season "travel intentions" survey that is followed up after the season to confirm the earlier estimates. The post-season surveys have validated the pre-season surveys with a high degree of accuracy, Peck said.

The survey is of people who respond to various marketing initiatives, whether direct mail or advertisements or articles in various media outlets.

ATIA surveys a sample of the people who made inquiries for more information to ask whether they really intend to visit Alaska. This year the survey indicates a modest increase, the 5 percent to 6 percent, over the response last year, Peck said.

The post-season survey is a call back in September to ask whether people who said they intended to visit in the spring actually made the trip. After doing the surveys for 10 years the ATIA has a lot of confidence in the result, he said.

ATIA's major concern is whether there will be enough state money available for marketing next year, which will affect the number of independent travelers.

Money that has been made available through the state operating budget, which was approved earlier this month, is insufficient to do the job, he said.

The association is hopeful that more money will be available in the capital budget, Peck said, but that bill has been held up by the recent impasse in the Legislature.

ATIA works with the state under a contract where the state provides funds that, along with contributions from the association's members, pays for a generic Alaska tourism-marketing program.

The large cruise lines do their own advertising for their cruises but the state's generic program is important in stimulating travel by independent visitors who also rely on the program to find out how to do their own bookings and travel arrangements.

Tim Bradner is a reporter for the Alaska Journal of Commerce. He can be reached at tim.bradner@alaskajournal.com.