Competition, accidents dampen tourism profits

Posted: Tuesday, September 19, 2000

A record number of cruise ship passengers this summer did not translate to record-setting profits for Juneau businesses.

"I'd say it (business) was flat," said Jeff Watts, owner of Alaska Fireweed House bed and breakfast in North Douglas. "Flat is never a success with all of my other costs going up."

Entrepreneurs said increasing competition diluted the money spent by an all-time-high 630,000 cruise ship passengers. Also, independent travel was hampered by negative publicity surrounding Alaska Airlines, the fire on the state ferry Columbia and increasing gas prices.

Watts, six-year owner of the Fireweed House, said many customers tried unsuccessfully to re-schedule their ferry reservations when the Columbia was taken out of commission early this summer due to a fire.

"They called us and told us they were canceled out," Watts said. "Then they canceled their trip. Between that and the Alaska Airlines crash, it raised the level of paranoia among traveling folks."

Many business owners cited the crash of Alaska Airlines Flight 261, which killed 88 people off Los Angeles on Jan. 3, and the subsequent federal investigation of the company's maintenance practices as reasons people were leery to fly the airline.

Terry Renner, owner of Aurora View Inn bed and breakfast, said his business was slower this year.

"We were off a little bit primarily because of the fire on the ferry and the bad publicity Alaska Airlines was getting," Renner said. "I actually had one group where I lost 22 days (of bookings) because of people hearing about the mishaps, the crash and all the publicity afterward."

Armadillo Tex-Mex Cafe owner Terry Harvey said his revenues were "on par" with summers past.

"If we're still open in the spring, that means we had a good summer, or at least an OK one," Harvey said.

The Armadillo, in business for 15 years, is one of the few downtown establishments open year-round. Harvey said it is becoming more dependent on tourism dollars to keep afloat through the slow winter months.

"We've found that we're not quite as viable in the off-season," he said. "We're not the new kid on the block, we're just a good ol' place."

But turning tourism dollars into sales receipts requires more marketing, Harvey said, because an ever-increasing business base is competing for revenues.

"There's a lot more businesses, our industry grows all the time," he said. "There's more choices."

Agreed Jack Cadigan, "You have to slice the pie a little bit more each time."

Cadigan, owner of the Irish Shop and president of Destination Juneau, estimated that 227 businesses served cruise ship tourists this summer.

"Nobody sounds up over last year," Cadigan said, referring to revenues of downtown entrepreneurs. "A number said they are somewhat down."

Cadigan guessed that the influx of tourists has led to an overall rise in sales and property taxes compared to last year, although Joan Roomsburg of the city's Finance Department said nobody knows for sure because the city hasn't calculated those numbers yet.

Even if the numbers are up, Cadigan said, profits are "probably fairly flat to a lot of individuals because of the increase in the marketplace and the size of our tourism community."

He said the decision by Princess' cruise ships to decrease their time in Juneau's port this summer probably hurt some businesses. Princess said it was merely responding to the desires of the city's anti-tourism group, which wanted to reduce downtown traffic. However, many local business owners thought they were being punished by the cruise line because Juneau passed a $5-a-head cruise ship passenger fee last year.

"Clearly it's cost the city and industry businesses money," Cadigan said. "The longer people stay here the longer they spend be it tours or shopping or a combination thereof. One ship leaving a few hours early isn't going to be a disaster, but it's obviously going to cost something."

Area RV parks also reported slow summers.

"We would like to have been busier," said Cindy Marble, owner of the Spruce Meadows RV Park which is concluding its first summer of operation. "Three things hindered tourism: (rising) gas prices, the ferry fire and the fact that the Mendenhall campground just opened."

Auke Bay RV Park owner Vivian Kirkevold agreed that the newly renovated Mendenhall Lake campground RV park and Spruce Meadows hurt her business.

"It was a very bad year. I'd say business was down 50 percent," said Kirkevold, who's owned her RV park since 1984. "I had some good years when I was here all alone."

Gary Droubay, chief executive at Goldbelt, the Juneau-based Native corporation, said the cruise ship market was quite strong or its tourism services. However, he said the independent traveler market was down considerably.

"Quite a few of our businesses depend on independent travelers," Droubay said. "Demand for hotel rooms isn't as strong. There's also a weakness in the Tracy Arm boat tours and Glacier Bay tours. And demand at the Glacier Bay lodge is weak."

Glacier Gardens Rainforest Adventure was one of the few businesses to report glowing results on the 2000 tourism season. This was Glacier Gardens' best year since opening three years ago.

"We had a really nice, busy year, a lot of visitors," co-owner Cindy Bowhay said. She attributed that to more cruise ship passengers and the company's continued efforts to expand its marketing plan.

Last year, Glacier Gardens received business from Princess Cruises and Royal Caribbean, but she and her husband have booked all of the major tour ship companies this year.

"They all came and visited and liked the tour," Bowhay said. "They just thought it was a great thing for people to do."



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