Carnival won't back up decline in passengers

Cruise line says Alaska visitors falling while company-wide occupancy increases

Posted: Wednesday, October 21, 2009

Alaska's biggest cruise line says visits to Alaska were down this summer, but the company's own financial filings raise questions about that statement.

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Klas Stolpe / Juneau Empire File
Klas Stolpe / Juneau Empire File

Carnival Corp. Chief Operating Officer Howard Frank told industry analysts in September that the number of passengers visiting Alaska was down this summer. Frank was arguing against the state's $50 cruise ship head tax at the time.

"It appears that the proponents of the head tax have been able to convince the political leaders in Alaska that the global economic crisis is the reason for declining passenger numbers in 2009," Frank said during an industry conference call discussing the summer's results.

Those results, however, show that Carnival actually had a corporate-wide increase in occupancy on its vessels, going from 110.9 percent in the summer of 2008 to 111.4 percent in the summer of 2009. The figures exceed 100 percent because industry practice is to calculate occupancy using two passengers per cabin, even though some cabins can accommodate three or more passengers.

Company-wide, Carnival carried 2,485,000 passengers in the summer quarter, up from 2,322,000 in the summer quarter last year. It operates in Alaska, the Caribbean, Mexico and elsewhere.

Carnival does not break out its Alaska operations in its quarterly reports. Corporate spokesman Tim Gallagher initially offered to provide details to the Empire on how much Carnival's Alaska visits had declined, but when pressed, eventually declined to do so.

The information is not otherwise publicly available.

"That's not really something we make public," Gallagher said.

It looks like Alaska cruise visits will decline in 2010, however, with three ships being relocated to other destinations and a fourth reducing its Juneau stops. Meanwhile, two ships, including the 1,750-passenger Disney Wonder, will make new stops in Alaska beginning in 2011.

Frank told the industry analysts that the reason ships are being relocated away from Alaska is that the industry doesn't make as much as it did before the ballot initiative.

"When we compare Alaska to other premium cruise markets during the peak summer months, it is now far less profitable than it has been in the past," he said.

Alaska's voters adopted the cruise ship initiative in 2006, and it went into effect for the 2007 season.

The industry has strongly opposed the tax, and an industry trade group has filed suit to strike it down. Head tax proponents and critics have each argued that declines in numbers of cruise passengers or lack of declines support their arguments for or against the tax.

Carnival, with subsidiaries Princess Cruises and Holland America Lines, is the largest cruise ship company in Alaska, and brought more than half of Juneau's roughly 1 million cruise visitors this summer.

Department of Revenue head tax collections have been relatively consistent in the three years the tax has been collected, with 2008 being a record year and 2009 likely to be slightly below that.

As of the end of August, 2009's head tax collections were up about 1 percent from the same period in 2007, but down about 2 percent from last year.

So far this year, 824,499 passengers visited Alaska, compared to 842,537 as of the end of August 2008 and 815,818 in the same period in 2007.

Chip Thoma, with Responsible Cruising for Alaska, the Juneau-based group responsible for the head tax ballot initiative, said he doubted the veracity of Carnival's claims of a decline and said the cruise industry would remain strong in Alaska despite the tax.

"The recession is going away, the ships are full and Disney is coming," he said.

Thoma doubted the Legislature would agree to roll back the voter-approved initiative.

"The Chicken Little approach is just not resonating with the Legislature," Thoma said.

• Contact reporter Pat Forgey at patrick.forgey@juneauempire.com.





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