Economists expect next season’s cruise passengers to be more budget conscious. Here cruise passengers take a rest in downtown Juneau.
Following a stagnant 2008 cruise visitor season, signs are less than healthy for the 2009 season.
Advance bookings are down and companies are deeply discounting existing inventory. One line is already advertising seven-day Alaska cruises for $499 – or about $70/day.
“The outlook for 2009 will be challenging at best,” said John Binkley, president, Alaska Cruise Association. “The economic meltdown has hit our most favored customer the hardest – and Alaska is one of the most expensive destinations in the world.”
Jonathon King, a senior economist at Northern Economics, an Anchorage research firm, agrees. “If you look at who we’ve tried to bring to Alaska – a little more affluent. It’s the people who are close to retirement – looking at their 401(k)s.”
King told a recent Resource Development Council of Alaska meeting that he expects these folks to bypass Alaska next year and that visitor spending will decline. “Even if the industry’s biggest customers, cruise ship passengers, arrive in the same numbers as they did this year, these trips will be deeply discounted and the passengers will be more budget conscious.”
Many Alaska communities found that this season’s crop of cruise passengers were frugal, at best. Juneau sales tax revenues are running well below projections, leaving the city needing to find an additional $1 million in new revenues or face budget cuts. Fairbanks reported a downturn in visitor revenues, as did Skagway, Alaska’s third most popular cruise port.
The outlook for 2009 is anything but optimistic. Alaska was one of the highest-cost destinations even before the 2006 Alaska cruise ship initiative added another $75 million a year to the cost of doing business in the state.
“The fact that they’re (cruise lines) discounting this early, it looks like bookings are a little soft,” noted Lorene Palmer, president of the Juneau Convention & Visitors Bureau. “In order to get to the capacity they had last year, they’ve got to cut pretty drastically.”
“We’re all being subjected to the national economic picture. There’s no surprises that people are feeling caution about how they spend their money,” Palmer said.