Cruise ship head tax good for tourism

In my final segment about the challenges of running government like a business, we’ve reached one of the most important areas of any government or business, the marketing department.

In Alaska, our future economic success hinges on our ability to market our diverse natural resources. Oil and gas, mining, timber and fishing have all enjoyed substantial help from the legislature. From exploration tax credits and streamlined permitting to fifty million dollars from the feds to market Alaska’s seafood, we’ve taken steps to develop these important economic engines.

Unfortunately, our second largest private sector industry hasn’t benefited from the same political attention. In the last fourteen years, while facing increased competition from other travel destinations and a changing traveler profile we’ve decreased our tourism marketing investment by 76%.

In the tourism industry there are three letters that define economic strength, f.i.t.
That stands for free independent traveler. Independent travelers arrive on airplanes, and traditionally spend more money in local restaurants, retail shops and patronizing optional tour attractions. They make local economies hum.

The benefits of increasing independent travelers transcend the tourism industry. Over the last five years the city of Anchorage has seen construction of 1300 new hotel rooms, which has added $4.3 million in property taxes alone. Visitor industry taxes help keep your personal property taxes lower.

But even with a tremendous increase of hotel beds, Anchorage bed tax receipts have been flat. Between 2000 and 2002, bed tax revenue grew at a rate of less than one percent. The reality is independent travelers are becoming a scarce commodity.

During the last five years the growth rate of deplaning passengers at the Ted Stevens International Airport has slowed to less than one percent per year. In Fairbanks during that same time period the growth rate was less than Anchorage. Similar trends can be spotted in Juneau and Kenai.

And ever since we’ve retreated from aggressively marketing to the independent visitor, a different type of visitor, the cruise ship passenger, has quickly replaced them. In 1993, there were 247,000 passengers to Alaska on cruise ships. Ten years later, that number has reached 725,000 visitors.

And what have we done for the cruise ship industry? We’ve built them a twenty eight million dollar train depot at the Anchorage airport and politicians have given the industry the best protection that lobbyist can buy.

On April 24 the governors press spokesman stated that Gov. Murkowski opposed legislation that would implement a cruise ship head tax. “I think he believes we shouldn’t single out a specific mode of transportation,” said John Manly.

However, seven weeks later the governor singled out a specific mode of transportation that is primarily small Alaskan owned companies. He approved a ten percent sales tax on car and motor home rentals. Meanwhile, multi-national corporations and their seasonal customers continue to use the same infrastructure for free. Yes I’m in the car rental industry, but that doesn’t change any of the facts you’ve just read.

So how do we fix the problem?

First the state needs a long-range fiscal plan to protect local Alaskan communities and their ability to finance growth. Many Alaskan communities like the Mat-Su are trying to transition to tourism and they need stability to finance needed infrastructure.

Second we need to grow our marketing efforts. Cruise ship passengers should start contributing the same amount per transaction as the vehicle rental tax. A forty-dollar head tax on the industry would generate thirty million dollars in needed revenue to the state. This would provide the resources to create an effective marketing plan to attract the type of year round tourists that do more to help sustain our local economies.

Third, communities need to grow their infrastructure. In Anchorage we need a new convention center so we can begin attracting larger conventions to fill the additional hotel room inventory. Years ago the challenge wasn’t convention space it was available hotel space. Now the challenge isn’t hotel space, it’s available convention space. Larger conventions represent more free independent travelers, which create more economic opportunities for Alaskans.

These efforts will restore Alaska’s lost marketing magic and that’s good business for all Alaskans.