Goldbelt selling cruise ship unit

Corporation continues to operate a lodge, day cruise in Glacier Bay

Posted: Wednesday, May 28, 2003

ANCHORAGE - Goldbelt Inc., the Juneau-based Alaska Native corporation, is selling its regional cruise ship subsidiary. The corporation, which has several tourism businesses, lost $4.4 million in 2001.

Last year, the loss ballooned to $18 million, though $14 million of that was due to the reduction of the market value of its investment in Glacier Bay Cruiseline, according to Gary Droubay, Goldbelt's president and chief executive.

An agreement to sell the regional cruise line is in the final stages, Droubay told the Alaska Journal of Commerce.

"We have signed a letter of intent to sell, by all parties, very close to definitive agreement," Droubay said. He declined to name the buyer, because of confidentiality agreements.

"Without the losses of the cruise line in 2003, and depending on how the tour season pans out, the corporation could see a substantial improvement," Droubay said. He said the corporation could come close to breaking even.

Although Goldbelt is selling Glacier Bay Cruiseline, which operates four overnight cruiseships in Southeast Alaska, the corporation will retain its concession with the National Park Service to operate a lodge and day-cruise vessel in Glacier Bay, Droubay said.

Glacier Bay Cruiseline, which had revenues of $1.7 million in 2001 and $7.5 million in 2002, operates overnight cruises in Southeast. The cruise line takes passengers to places such as Admiralty Island and Tracy Arm. Passengers can get close enough to shore to see wildlife or take excursions in kayaks or Zodiacs.

"It's an adventure-tourism product and it has had wide appeal, but our company doesn't have the financial strength to market it properly," Droubay said.

The new buyer will have that capability, he said, and Goldbelt intends to partner with the company with joint sales through its other visitor-related businesses.

Meanwhile, Goldbelt is making progress on a major tourism development project on its lands at Hobart Bay, south of Juneau.

Goldbelt is working with international investors to provide cruise ship facilities for a day stop at Hobart Bay, and eventually hopes to develop overnight accommodations there, Droubay said.

In addition to selling the cruise line operation, Goldbelt has restructured its debt on the Mount Roberts Tramway, a popular visitor attraction in Juneau.

The tram operates through the summer and carries visitors to a small visitor center for sightseeing and hikes at the 1,800-foot level of Mount Roberts.

The tram had a good year in 2001 but saw a dropoff in volumes in 2002 due mainly to the effects of September 11 on tourism, said Joanne Wiita, Goldbelt's marketing director.

Droubay said the tram's original business plan overestimated the number of people it would attract and underestimated costs of construction. This resulted in a business that generated about $1 million a year in cash but required $1.5 million a year in debt payments.

A restructuring of the long-term debt with KeyBank and the Alaska Industrial Development and Export Authority lowered the debt payments to the point that revenues will now cover debt and operating costs, Droubay said.

The long-term drop in independent travelers coming to Alaska has hurt Goldbelt, along with many other Alaska businesses in tourism.

Goldbelt's day cruise in Glacier Bay, which depends totally on independent visitors, shows the decline.

"In 1999, there were 12,500 people who took the day cruise on our Spirit of Adventure, but last year there were only 7,500," Droubay said. "That's a very telling statistic."

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