Some local residents insist that Alaska's visitor industry is insulated from the events of Sept. 11.
In fact, our future is less clear than it was a few months ago. We're all paying closer attention to the news. We watch our net worth rise and fall with the stock market. Many people are skittish about traveling and those who do venture out are learning to cope with the frustration of long lines, delays, cancellations and increased security screening.
Across the country, uncertainty rules. President Bush says the war on terrorism will take years to win. And it's hard to hold a conversation or open a newspaper without being reminded about the confusion. One local headline shouts "Bullish on tourism" while another story whispers about cruise ships being "sitting ducks for terrorists." National magazine covers ask, "Are you too scared to spend?"
Many people are finding it difficult to make personal or business plans in this environment. Ongoing terrorism threats and the nation's economic downturn are hurting our economy. Juneau's tourist-oriented businesses lost an estimated $2.5 million during the two weeks immediately following the Sept. 11 attacks. Canceled flights and cruise ship visits accounted for some of the downturn. But business owners report that even the customers who showed up weren't buying much. And the slow down continues.
Juneau's public-sector employment dropped 9 percent in the past decade. This trend is likely to continue, especially now that state oil revenue is falling along with oil prices. Tourism is the second largest private sector of the Alaska economy behind oil. It is the only major Alaska business sector that expanded in 2000, primarily because cruise ships carried more customers into our state. Southeast is particularly dependent upon the visitor industry. Many of our new jobs are tourism related, so when tourism falls, Southeast's economy feels the pain.
Last year cruise companies delivered half of Alaska's visitors and generated more than $700 million worth of business across the state. Now they are among the businesses hardest hit by the ongoing terrorist threat. Their stock values fell by half after Sept. 11 and bookings to Alaska and other destinations plummeted. Cruise lines are offering huge discounts to attract passengers, but their revenue is way down and bookings remain sluggish. No one knows how many people will ultimately choose to cruise in 2002 or how much they'll be comfortable spending once they get here.
At the same time cruise expenses are up. Cruise lines shuffled schedules to bring more ships to Alaska and keep them out of danger zones. They increased security. And they are spending hundreds of thousands of unbudgeted advertising dollars to lure visitors back to Alaska. That's on top of the more than $70 million they already spend annually to promote Alaska.
The rest of the visitor industry is facing similar problems. Revenues are down because fewer people are traveling and expenses are up because of terrorist threats. Extra security costs money and insurance rates are climbing. Many flight-seeing companies suddenly had their rates jump 50 percent to 300 percent. To remain solvent, these businesses need visitors to return next summer.
Vigilant civic leaders around the state are bracing for reduced tourism. Seward officials cut $450,000 from their 2002 budget in anticipation of a 20 percent decrease in sales and bed-tax revenue. And Fairbanks administrators reduced their 2002 budget by nearly $2 million because they expect a $200,000 drop in bed-tax revenue and lower permanent fund earnings.
During shaky economic times we need outside tourist dollars more than ever. This money keeps Alaska businesses healthy, creates jobs and generates tax revenue that pays for services we all need and use. Our political leaders should support this important sector of our economy and encourage people to visit our state. They should not back new taxes that would hurt our visitor-related businesses.
That's exactly what the proposed $100 per couple cruise ship head tax would do. It would tax Alaska businesses by chasing away potential visitors or taking money that cruise passengers would otherwise spend at Alaska businesses.
We're already having a hard time convincing prospective travelers that Alaska is an affordable place to visit. Why give potential visitors one more reason to stay home?
Paulette Simpson of Juneau contributed this commentary on behalf of the Visitors Benefit Alaska Coalition.