Tourism group wants to trade tax dollars for marketing dollars

Citing a need to draw more visitors to Alaska to stem anticipated declines as cruise ships rework their routes, the Alaska Travel Industry Association urged the House Finance Committee Wednesday to approve a corporate tax credit for cruise lines that contribute voluntarily to the association.

The move is expected to net more money for marketing Alaska as a tourist destination and is supported by Gov. Sean Parnell, but the cruise industry cautioned that a tax credit for marketing isn't a fix-all for the troubling state of affairs.

Alaska Cruise Association President John Binkley said that if lawmakers opt for a tax credit, it should be extended to others involved in the tourism industry as well -- not just the cruise lines.

"Although marketing Alaska is an important component to growing the visitor business, there should be no illusion that this is the only challenge our industry faces," Binkley said on Thursday. "The cost of doing business in Alaska continues to increase and will be a critical component to address in turning around the downward trend we are experiencing."

The cruise industry filed a lawsuit earlier this year challenging a state tax imposed on cruise visitors.

Alaska should expect to slip below 1.5 million summer visitors in 2010 as cruise ship passengers and independent travelers continue to decline, ATIA Executive Director Ron Peck told legislators. Visitors peaked at 1.7 million in summer 2007.

Marketing is critical as a general economic slump keeps more people at home and away from expensive, trip-of-a-lifetime destinations like Alaska, Peck said. The state's contribution to ATIA's annual budget in fiscal year 2009 was $9 million, which was combined with nearly $3 million from tourism companies and the cruise lines serving Alaska. Peck and ATIA members want to see total tourism marketing funds hit about $20 million.

"I don't know where the cruise industry is headed," Peck acknowledged. "I believe we can generate additional travel ... with additional funding, we can change that trend."

Brett Carlson operates a tourism business out of remote Coldfoot, a couple hundred miles north of Fairbanks along the Dalton Highway. He's also chairman of ATIA, which has nearly 2,000 member businesses.

"The long and short of it is, the Alaska travel industry is coming off its worst season in 50 years," Carlson said, promoting the bill as sound public policy even in the best of times. "The only way we can get (tourists) to come to Alaska is to reach out."

The association wants lawmakers to approve House Bill 167, introduced in 2008 by then-Rep. John Coghill, R-North Pole (now a senator). The bill would offer a state corporate tax credit to cruise lines in proportion to their contributions to the state tourism marketing program.

The entire tourism industry paid $3.5 million in corporate taxes in fiscal year 2007, and $15.8 million in 2008. Cruise lines were exempt from the corporate tax until voters passed a 2006 initiative.

A line of tourism industry professionals testified Wednesday about the increasing need for broad marketing of Alaska in light of steep declines realized in 2009 -- and predictions for 2010 that show no promise of improvement.

Peck offered estimates of declines through 2009, and warned legislators that 2010 isn't looking much better. Major cruise lines have nipped and tucked itineraries in Alaska, and due to decreases in sailings, Alaska can count on 140,000 fewer cruise visitors than in 2009. The number could decline more if cruise lines fail to sell out berths on ships scheduled for Alaska runs, and passenger spending on shore could continue to slip if the industry is driven to slash rates to fill ships.

Gulf of Alaska cruises will be down the most through route restructuring, with a reduction of almost 30 percent, or 230,000 passengers, Peck said. About half of gulf cruisers take structured land tours, which will likely be down as well.

Those land tours take visitors deeper into Alaska, whether to Denali or all the way to Fairbanks. Half of all summer tourists to the Interior city arrive in the state via cruise ship.