For the first time since 2009, more than 1 million are expected to cruise through Alaska’s waters this summer. As a result, tour operators, hoteliers, and countless other support service companies in the tourism industry will enjoy a busy season that will result in more jobs and more revenue flowing through the Alaskan economy. From Metlakatla to Nome, the positive economic impacts of more visitors will be felt statewide.
At a recent RDC breakfast meeting presentation, John Binkley, President of Cruise Lines International Association – Alaska, explained the cruise industry provides a different sort of economic pipeline that delivers a resource – tourists, up the coastlines and into Alaska’s interior. Binkley half-jokingly referred to this as CAPS, the Cruise Alaska Pipeline System. “It is really similar to TAPS. It brings economic prosperity up a pipeline corridor. It’s another way to get wealth and opportunity to Alaskans, by developing a resource,” Binkley commented. CAPS is comprised of cruise ships, rail and motor coach, the latter delivering passengers as far north as Prudhoe Bay.
At a time when many other industries in Alaska are suffering from low commodity prices and fiscal uncertainty, the tourism industry offers a bright spot in Alaska’s economy. However, it has taken several years for passenger numbers to recover from a “head tax” that was instituted in Alaska back in 2007. With more than 1,000 ports globally competing for capital, many cruise ships quickly sailed to more investment friendly waters, and took upwards of 150,000 tourists with them. The Alaska Legislature responded to this mass exodus by reducing the head tax in 2010, and industry responded by bringing ships back to Alaska. “When you improve tax policy, you increase the throughput. Not unlike the oil industry, when the legislature lowered the tax policy, we increased the throughput of people coming to Alaska through CAPS,” Binkley explained.
Capacity is another reason Alaska is experiencing more tourists this year. Consumer demand and higher profitability means the ships are getting bigger, delivering more people to each port of call. The expansion of the Panama Canal also means that larger ships that have traditionally stayed in the Atlantic regions can more easily transit into the Pacific.
Alaska’s share of the cruise market: Not what you might think
While the increased visitor numbers to Alaska are good for job creation and our economy, it does not mean that Alaska is increasing its share in the market. In fact, over the last decade, Alaska has gone from an 8 percent market share to just slightly above 4 percent. The cruising industry is growing rapidly and ports around the world are vying for their share of the business.
Asia has seen an incredible rise in cruise passenger traffic and number of ships heading for Asian ports, specifically in China. It is now the third largest region in terms of passenger capacity, trailing only the Caribbean and Mediterranean, and accounts for 9.2 percent of the global market share. These numbers are only expected to increase in the coming years, and it is projected that Asia’s market share will grow to 20 percent by 2020.
Why is this good for Alaska? According to Binkley, Asian passengers have a high likelihood of making Alaska their next cruise destination. “Alaska is on the top of many tourists’ minds, specifically coming out of Asia. All the fundamentals are there for continued growth in the cruise industry in Alaska.”
Binkley concluded his presentation by emphasizing the importance of all resource industries in Alaska working together to be successful: “We hope to contribute and grow the economy. We’re all in this together, whatever the visitor industry can do to support other industries in Alaska, we want to be there to do that.”
Source: Kati Capozzi, Resource Review
