Probing promotional pay

Initiative expands reporting of fees for shore trips

Posted: Wednesday, August 16, 2006

Some businessmen, such as Mike Windred, see Ballot Measure 2 as an attack on competitive business practices, while initiative supporters say it's about arming consumers with more information.

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If voters approve Ballot Measure 2 in the Aug. 22 primary election, cruise ship operators will be required to disclose the amount or percentage of commission they collect for promoting shore excursions.

"The last time I remember, we set up America as a free market system," said Windred, director of operations at Alaska Travel Adventures. His business pays a commission to cruise lines to book tours with his company.

The disclosure required by Ballot Measure 2 would reveal the wholesale price of his company's tours, giving competitors an advantage to market their trips for a lower price, he said.

The provision is one of several included in the initiative, which also calls for a $50 head tax and taxes on gambling in state waters, a mandate for ocean rangers on board ships and tougher environmental regulations.

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Supporters of the measure say the disclosure of commissions would help passengers.

"It's not about the vendor. It's not about the cruise lines. This is about the consumer," said Juneau attorney Joe Geldhof, a sponsor of the initiative.

Cruise ships often contract with a separate company to conduct lectures and pass out materials about attractions and places to shop in the port cities, said John Shively, spokesman for cruise liner Holland America.

Local businesses pay to be mentioned aboard the cruise ships, he added.

Many ships also operate a desk on board that makes reservations for shore excursions, such as whale-watching tours and sport fishing, kayaking and flightseeing trips, Shively said. Holland America charges a fee to tour companies for selling their trips, which covers staff and expenses needed to operate the desk, as well as some for profit.

Travelers are told the cruise ships guarantee the quality of businesses on the list, but they cannot guarantee any degree of quality with those operations not on their list.

"These people are convinced that if they buy from someplace else, something bad will happen," Geldhof said.

Passengers unfamiliar with the port cities may be misled to shop at a particular store or reserve a tour, not because of the quality, but because staff on board are paid to mention those businesses, said Sen. Kim Elton, D-Juneau, who supports the initiative.

Mortgage brokers and stock brokers by law must report their commission rates, but such disclosure is unheard of in the tourist industry, according to local business operators.

Laws already require cruise ship operators to notify passengers that such promotions are paid for by on-shore businesses. That disclosure is written on shopping maps and is printed on catalogues given to passengers when they receive their tickets, Shively said. They also are told on board about the commercial relationship between the cruise ships and local businesses, but commission amounts or percentages are not mentioned.

The Commercial and Fair Business section of the Alaska Department of Law receives few complaints from cruise ship passengers about their shopping or touring experiences, said assistant attorney general Ed Sniffen.

"The law is fairly broad," he said, of the current law on disclosure. "But that doesn't mean that it can't be enforced."

Sniffen said it would be helpful to the consumer if the law was clearer, but he is not sure if the situation was critical enough to warrant changes like those in the ballot initiative.

The measure also calls for reporting of commissions or business agreements to be spelled out in 14 point-sized font in a contrasting color.

Local economist Gregg Erickson says this measure appears to be more of a consumer issue than one aimed at evening the playing field for business competition.

"I'm a big supporter of the free market," wrote Erickson, who supports the initiative, in an e-mail. "To me, a free market is where consumers make their own choices based on fullest possible information."

Passengers on board are smart enough to make their own decisions, said Gary Droubay, CEO of Goldbelt, which operates the Mount Roberts Tramway and a tour service. He opposes the measure.

Goldbelt advertises or offers commission for all ships except one line that docks in front of the tram, he said. "But not everyone has that luxury."

• Andrew Petty can be reached at andrew.petty@juneauempire.com.



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